Photo taken on April 17, 2020 shows the World Bank headquarters in Washington, D.C., the United States. Photo: Xinhua

China's economic growth is projected to reach 8.5 percent as economic activity has continued to normalize in the country, according to a report published by the World Bank on Tuesday. 

Economic growth in China was projected to be 8.1 percent as reported by the World Bank in March but has been adjusted to 8.5 percent in June. 

Improved consumer and business confidence and stronger labor market conditions will support a shift toward private domestic demand from public investment and exports, read the report, adding that the drivers of China's economic growth will be gradually transitioned from industrial production toward services. 

Risks to China's economic outlook including repeated Covid-19 outbreaks, bilateral tensions with key trading partners, and financial stability risks associated with high corporate leverage and inflated property markets are broadly balanced, with the robust recovery of private consumption and investment together along with a stronger and more broad-based global upturn could support stronger growth, according to the report.   

However, China still faces many medium-term challenges, said the report, adding that demographic headwinds, slowing productivity growth, a high level of inequality and remaining social vulnerabilities and a carbon intensive production structure are the main ones and some of them have been exacerbated by the Covid-19 pandemic even after accounting for a robust economic recovery. 

The report proposed that high quality growth could be achieved by reinforcing a set of reforms such as a more progressive tax system, investments in human capital and stronger social safety nets to reduce income inequality, and the transition to low carbon growth with broad benefits could be supported by a wider use of carbon pricing along with scaled-up green investments. 

Structural reforms are encouraged by enhancing market access in relatively closed service sectors, which would help increase competition, encourage innovation, and boost productivity growth, read the report. 

Responding to the World Bank forecast, Wang Wenbin, spokesperson of China's Foreign Ministry said on Thursday that China will continue to commit to openness, cooperation and unity to further opening up, making the Chinese market a global one. 

"China is at a new stage of development. It will promote high quality development and bring more opportunities for investment and growth for global partners," Wang said. 

This year, China's economy continues to show a steady recovery trend, and the pace of opening up to the outside world has been accelerating. In the first five months, China's gross domestic product (GDP) continued to grow. 

China's foreign non-financial direct investment amounted to $43.29 billion, while total imports and exports reached 14.76 trillion yuan, breaking a historical record, giving a strong impetus to world economic recovery and growth. 

Global Times