Beijing: World Bank president Robert Zoellick has asked the Chinese government to hasten planned structural reforms to shift the focus of its export-driven economy toward domestic consumption-led growth as the global economy entered a “new danger zone” this autumn.
“The bigger challenge for China in the autumn is if events (in the global economy) lead to a deeper downturn that affects demand for China’s exports,” Zoellick, currently touring China, was quoted by state-run China Daily as saying.
“China needs to be thinking about the structural basis for future growth. The world economy is entering a new danger zone this autumn. China’s structural challenges occur in the current international context of slowing growth and weakening confidence,” he told a conference here.
He said global economic indicators make for a bleak reading.
A monthly report by the European Commission showed that business and consumer confidence in the euro zone for August slid to its lowest level since May, 2010.
A report by the White House also predicted that US GDP growth will remain between 1.7% and 2.1% in 2011. Earlier predictions had put it at 2.7%.
The report also said that the unemployment rate would stand at 8.8% to 9.1% this year in the US.
Zoellick started a five-day visit on 1 September, his fifth since he assumed office in July, 2007.
The main reason for the visit is to discuss key medium-term challenges with government officials.
Given the gloomy prospects for developed economies, many economists lowered the expectations for China’s growth this year.
UBS, a global financial services firm, reduced its 2011 forecast for China’s GDP growth to 9% from 9.3% and from 9% to 8.3% in 2012.
It said that the expected drop in developing market growth will hurt China’s exports and related investment.
“I think it’s a good sign that the 12th Five-Year Plan (2011-2015) has recognised the need to shift the nation’s growth model,” Zoellick said. But he said the challenge facing China is daunting.
“Because if you’ve grown successfully, which China has, it’s very tempting for officials and businesses to say, ‘Let us just keep doing what we’ve been doing´.”
“As China is committed to increasing domestic consumption, import growth is expected to outpace exports for the rest of the year,” a recent report by UBS said.
Statistics from China’s Federation of Logistics and Purchasing showed that the country’s purchasing managers’ index gained 0.2 points in August to 50.9.
This reversed a four-month decline and, according to economists, indicated a soft landing for the economy, the daily said.
The World Bank and the Development Research Centre of the State Council are working together on identifying and analysing China’s medium-term development challenges by 2030, with the report due to come out at the end of this year, the daily said.