China's Economic Growth to Slow to 8.7% in 2011 From 10%, World Bank Says
By Ian Katz - Jan 13, 2011
China’s economy will expand 8.7 percent in 2011, down from 10 percent last year, as the government tries to limit increases in asset prices, the World Bank said.
China’s growth will ease partly because of “the unwinding of fiscal stimulus, restrictions placed on overheating sectors,” such as housing, and a tighter monetary policy, the bank said in a report released yesterday. The Washington-based lender forecast China’s economy to grow 8.4 percent in 2012.
Premier Wen Jiabao’s government raised borrowing costs twice last year and may take measures to “guard against asset- price increases, strained local government finances and a buildup of non-performing loans in the banking system,” the Washington-based lender said. China has considerable scope for more rate increases, Vikram Nehru, the bank’s chief economist for East Asia and the Pacific, said in Beijing today.
Inflation in China accelerated to 5.1 percent in November from a year earlier, the fastest pace in 28 months, driven by higher food costs. The benchmark one-year deposit rate stands at 2.75 percent, while the lending rate is 5.81 percent.
The bank expressed concerns about the possibility of so- called asset bubbles in the East Asia and Pacific region, whose largest economies include China, Indonesia, Thailand and Malaysia. The region is forecast to grow 8 percent in 2011, down from 9.3 percent in 2010, according to the report. Growth for 2012 is projected to be 7.8 percent.
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