World Bank Expects China’s Economy to Slow Down

China was one of the fastest growing economy in the world. High demand from other countries along with cheap labor helped the country to succeed. China is not able to maintain same steam as it had in the past. World Bank in its recent report predicts gradual decline in China’s growth.

China's economy

The Statement

 

The World Bank expects China to grow at 6.5 percent in 2017 and 6.3 percent in 2018. East Asia and Pacific Economic Update also stated that China grew at 6.7 percent in 2016. Investors were not happy with recent predictions.  The numbers came out as a disappointment for the investors who had high hopes. According to report, China is looking to rebalancing its consumption and services. Part of the slowdown is also due to slowdowns in world trade. Slowdown in global trade along with trade barriers can add more pressure.

China and U.S. relations remain strained. Both countries continue to put efforts on strengthening the trade policy. China has been under attack for manipulating Yuan time and again to support its exports. Though the country has denied.

Current Situation of China’s Economy

 

The country is not in a prosperous condition as it is likely to hit the same GDP level which prevailed in the 1990’s.  It has reduced its growth target to 6.5%. The country continues to focus on internal economic drivers instead of increasing its GDP. The country has high debt due to its policy of “easy access to credit” for boost the slowing economy. High rates of unemployment have prevented the country from sustaining its growth.

Bottom Line

 

World Bank’s remark on the Chinese economy does not come as shock. The country is trying to solve some basic problems embarked by its economic policies. The country has two years to survive the roadblocks and ensure that their country is back on track. The meeting between US and Chinese presidents is a first step (among many). The country is looking forward to rebuild one of the biggest economies in the world.