The World Bank projected China
's real gross domestic product (GDP) growth at 9.3 per cent this year, revising its previous projection of 8.7 per cent.
The Bank had predicted that China's GDP growth would slow to 8.7 per cent in 2011 in its last quarterly report released last November. In the latest China Quarterly Update, it predicted that China's economic growth rate will be 9.3 per cent in 2012.
It suggested a fully normalised macro policy stance to address the macro risks with respect to inflation and the housing market.
In a regular assessment of China's economy, the World Bank said that China's economic growth has remained resilient as the macro stance moved toward normalisation and the economic outlook remains broadly favourable.
The global growth outlook has so far been little affected by the higher raw commodity prices and the earthquake in Japan.
Domestically, headwinds from a normalised macroeconomic stance, inflation and somewhat slower global growth is likely to be partly offset by solid corporate investment and a still robust labour market and an expected slowdown in mainstream housing construction should in part be compensated by the government's ambitious social housing construction plans, said the report.
The report predicted another decline in the current account surplus in 2011 with the surge in raw commodity prices.
However, whether the trend toward a lower external surplus and lower dependence on external trade will be sustained remains to be seen, Xinhua news agency quoted the report as saying.
The report finds that inflation should moderate eventually with food price increases slowing and core inflation remaining in check, given quite a bit of adjustment to the macro stance already.
"However, with much of the impact of the higher oil and industrial commodity prices still in the pipeline, inflation expectations are still high and there is little spare capacity in the economy. Therefore, a full normalisation of the macro policy stance is important," Louis Kuijs, senior economist of the World Bank, said.
It is too early to stop the macro tightening as inflation and property market risks are still high.
Two way risks are better dealt with by maintaining fiscal and monetary flexibility, he said.