Beijing, April 13 (IANS) The World Bank on Thursday said it estimates a 6.5 percent growth rate for China in 2017, and a moderate slowdown over the next two years amid changes in the country’s economic model.
During the presentation of the report “East Asia Pacific Economic Update”, World Bank’s chief economist for the region, Sudhir Shetty, said Beijing will address the significant risks that threaten its economy, Efe news reported.
The report warns of issues arising from corporate debt in China, whose companies closed 2016 with a debt amounting to 170 per cent of the GDP, according to data from international organisations.
The World Bank has encouraged Beijing to confront this problem through the restructuring of state corporations and recalled the importance of tightening regulations on the shadow banking system and addressing growing mortgage indebtedness among households.
The bank predicts China’s economy will continue “to slow down gradually”, forecasting a growth rate of 6.3 per cent in 2018 and 2019.
The slowed growth reflects “the impact of the government’s measures to reduce excess capacity and credit expansion”, it says, adding that an expected result of this will be a slowdown in activity in the real estate sector.
Exports, however, are expected to increase moderately after two years of decline.
The study also says the government’s commitment to change the economic model to make it less dependent on its external sector and public investments and instead focus its growth on domestic consumption along with sustainability, will continue to bear results at a gradual pace.