The World Bank raised its 2011 growth forecast for China’s economy to 9.1% from 9% in its East Asia and Pacific Economic Update released on Tuesday, but said China would face growing risks, especially from the euro zone crisis.
The bank reckoned a soft landing of China’s economy is achievable through appropriate loose monetary policy and industrial stimulus.
China’s economy would slow down dramatically after 2012 and the central government should accelerate the transformation of its economic structural adjustment to reduce excessive dependence on the real estate and manufacturing sectors, the bank suggested.
The new update lowered expectations for economic growth in Asia as it believes the deluge in Thailand has substantially hit local manufacturers and slowing demand in developed markets will also hurt Asia’s exports growth.
China’s economic growth is expected to slow to 8.4% in 2012, the report said.
The report noted a significant slowdown in China’s economic growth compared with a year earlier was mainly due to sluggish overseas market demand and monetary tightening policy.
There will be more room for the Chinese government to adjust current economic policies with retreating consumer price gains, the bank said.