WB: China's economy faces growing risks from Europe

PanARMENIAN.Net - China's economy faces growing risks from Europe's sovereign debt crisis and from debt held by local Chinese governments but it could engineer a soft landing by easing monetary policy, the World Bank said on Tuesday, November 22.

According to Reuters, in a semi-annual East Asia and Pacific economic update, the World Bank nudged up its 2011 growth forecast for China but expects growth to moderate from next year as overseas economies slow and Beijing steers the economy to rely less on investment and manufacturing.

The lender also slashed growth forecasts for developing Asia, excluding China, due to weak export demand from developed countries and as widespread flooding has hit Thailand's manufacturing base.

"On balance, we believe that while there are issues (in China), they are being managed and the magnitude of those issues does not add up to something that would lead necessarily to a major slowdown as some have talked about," Bert Hofman, World Bank chief economist for East Asia and the Pacific, said.

“A recent World Bank study with the International Monetary Fund also showed that China's banking system can withstand exchange rate and interest rate shocks,” Hofman said.