World Bank: China's economy in 'soft landing'

@CNNMoney April 12, 2012: 9:50 AM ET

NEW YORK (CNNMoney) -- Though China's economy is slowing, it should be able to achieve the desired "soft landing," according to a new analysis from the World Bank.

In its quarterly report on Chinese economic growth, the bank estimates that China's growth rate will come in at 8.2% in 2012 and then rebound to 8.6% percent in 2013.

While that would be a slowdown from 9.2% growth in 2011, it's not the "hard landing" that many had feared would drag down the world's No. 2 economy and damage global growth.

The World Bank forecast is still stronger than the target of 7.5% growth given by Chinese Premier Wen Jiabao in a speech last month which rattled global markets by raising concerns about a slowdown in China.

After taking steps in much of 2011 to try to slow growth and control inflation, the People's Bank of China, the nation's central bank, has been loosening monetary policy this year to try to spur growth.

Much of the slowdown has come from a drop in exports, especially to Europe, where sovereign debt worries and government austerity has caused the economy to shrink.

Exports are likely to subtract 0.3 percentage points from China's economic growth, according to the report, but domestic consumption should stay strong enough to support growth above 8%.

The World Bank report says that the Chinese economy will eventually move to be more dependent on domestic consumption rather than exports, a healthier balance that could lead to more modest growth over the long term.

"The welcome efforts to rebalance the economy should also alter the pattern of growth and improve its quality," the report said.

The World Bank, a multinational organization that provides financial assistance to developing countries, has been issuing warnings about global growth and the Chinese economy in other reports this year.

In January it warned the world is on the cusp of a new global recession that could be as bad as the crisis four years ago if there is an escalation in Europe's sovereign debt crisis, a new oil shock, or a "hard landing" in one of the larger developing economies.

In February, it said that China faced an economic crisis in coming years unless it moved to more quickly to freer markets. To top of page

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