As remarkable as China’s growth has been over the past three decades, the study suggests the development pattern has been uneven and unsustainable. Beijing, it says, ought to make significant changes.
“The case for reform is compelling because China has now reached a turning point in its development path,’’ Robert B. Zoellick, president of the World Bank, said during a speech in Beijing yesterday. “Managing the transition from a middle-income to a high-income country will prove challenging; add to this a global environment that will likely remain uncertain and volatile for the foreseeable future, and the need for change assumes even greater importance.’’
China is in the midst of a once-in-a-decade leadership transition, and the report’s proposals could help influence the way the next generation governs.
Also, there are growing concerns among analysts that China’s economy is facing strong headwinds. Economic weakness in Europe, Japan, and the United States is threatening to dampen China’s export boom.
And after years of heavy investment in infrastructure, there are worries in China about inflation, local governments’ mounting debts, and the possibility that big state-owned banks could be at risk.
In news conferences, Zoellick said he was reassured that the government would undertake bold reforms and that he expected China’s economy to remain strong this year, with a soft landing likely. The 400-page report, however, says little about the immediate challenges. Instead, it lays out a road map packed with proposals that the authors hope will lead to gradual reforms over years.
If all goes well and China undertakes serious changes, the study predicts, the nation could grow at about 8 percent for the next few years and sustain average annual growth of about 6.6 percent for nearly 20 years.
That growth, the study says, should eventually slow to about 5 percent in the years leading up to 2030, more than enough to help China surpass the United States as the world’s biggest economy.
