China’s retail ‘coma’ set to weigh on economic growth amid increasingly tight credit controls
- World Bank on Tuesday maintained its growth forecast for China’s economy at 8.5 per cent for 2021, expecting the rate to moderate to 5.4 per cent in 2022
- A China Beige Book report also found investment in small companies slowed and borrowing ‘fell off a cliff’
China’s economic growth is on course to lose steam in the coming quarter amid Beijing’s increasingly tight credit controls and the slow recovery in consumption, which may drag down growth next year, according to reports from the World Bank and US-based research firm China Beige Book.
The World Bank on Tuesday maintained its growth forecast for China’s economy at 8.5 per cent for 2021, expecting the rate to moderate to 5.4 per cent in 2022 as a result of diminishing fiscal and monetary support and more prudent measures in sectors such as property.
“[Gross domestic product] growth will stabilise slightly below its earlier trend rate by late 2022, as fiscal consolidation and de-risking and deleveraging will weigh on growth,” said the World Bank report.
The World Bank said that while China’s overall debt-to-gross domestic product (GDP) ratio dropped to 280 per cent in the first quarter of 2021 from 285 per cent at the end of 2020, it is largely a reflection of higher nominal GDP growth rather than a trend in a decline of public debt.