WB lead economist on China's growth potential
China's GDP growth has been slowing steadily since it last hits double digits at 10.4% in 2010. The country's GDP growth in the first half of the year stands at 7.6 percent. The second quarter growth slowed to 7.5 percent from 7.7 percent in the first quarter.
Although the Chinese government has expressed confidence in achieving the 7.5 percent GDP growth target this year, several Western investment banks and economists have in recent weeks revised down their growth forecasts for China, with the more bearish ones falling below 7 percent.
But according to John Wilson, lead economist at the World Bank, a closer look at China's growth potential tells a different story.
"A great deal of our work suggests there are significant potential gains to China with continued investment and reform in infrastructure," Wilson, who has spent a considerable amount of time in China doing work on trade issues, told me.
"We did work on looking at the role of trade transparency and regulatory reform, and its impact of reform in the East Asia region. And in regard to China, we found that improving trade regulatory system and transparency in China could translate into a 6.3 percent increase to China's GDP."
The potential 6.3 percent increase means much room for China's GDP growth and gives a good reason for optimism. And for an economy that relies heavily on exports, that's not all.
"If China were to improve its physical infrastructure in ports, roads and rail, just halfway to the level of Malaysia, which is, in our data, the top performer in East Asia, it could increase China's exports by 10 percent. And that is the equivalent of tariff cut on Chinese exports of about 9 percent."
Just as the country's top economic planners said, China still faces a strategic opportunity, and they have faith in stabilizing growth and hitting this year's 7.5 percent growth target.
(This is a reprint from the People's Daily Online of the August 14, 2013 edition.)