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World Bank cuts China's economic forecast for this year
In its latest East Asia and Pacific Economic Report, the World Bank lowered its economic growth forecast for China and most developing East Asia economies this year and next. The bank expects China's economy to grow 7.5 percent in 2013 and 7.7 percent next year, down from 8.3 percent and 8 percent projected in the spring. At the same time, the World Bank also lowered the economic growth of developing countries in East Asia this year and next year to 7.1% and 7.2%, respectively, from 7.8% and 7.6% predicted in April. The reason is slower growth in China and other countries in the region. After a massive investment stimulus backed by a credit expansion, Chinese policymakers must focus on curbing excessive credit growth and tightening financial regulations, the World Bank said. The World Bank has expressed some concern about China's local government debt, especially given the complexity of the issue and the opaqueness of local government finances. The bank recommends that 'clear borrowing rules should be adopted for permitted sources of borrowing, debt settlement, and the publication of comprehensive fiscal accounts of local governments.' At the same time, the report also said: 'The rapid expansion of shadow banking has also brought serious Challenges, because shadow banking is closely linked to the entire banking system, but is less regulated and contains implicit guarantees from banks and local governments.” However, the World Bank also said that China has a large amount of assets to pay for local government debt problems. debt, as the government's land bank is worth 10% of gross domestic product (GDP). 'China's economy still needs to pivot firmly to consumption-driven growth,' the World Bank said.