BEIJING - The World Bank on Tuesday trimmed its 2008 growth forecast for China to 9.4 per cent from 9.6 per cent but said it should be robust enough to help drive the global economy as the United States and other industrialized countries slow.
Export growth weakened in late 2007 due to lower global demand but Chinese consumer spending rose, the bank said in a half-yearly report on Asian economies.
"While the uncertain global outlook may slow Chinas exports, the country's growth is expected to remain robust,'' the bank said. It said China could "continue to emerge as a growth pole in the world economy, providing a possible counterweight to the slowing industrial economies.''
Beijing has set a growth target this year of eight per cent following last year's 11.4 per cent expansion. The government often sets a low target for budget purposes and raises it as the year progresses.
Other forecasters also expect growing Chinese imports and consumer sales to help drive the global economy as U.S. demand slows, though they warn that China alone cannot fill the gap.
The World Bank's lower China growth forecast was a minor adjustment following its decision in February to slash its outlook to 9.6 per cent from 10.8 per cent previously due to the global slowdown.
China also will face continued pressure this year for prices to rise, the bank said.
Consumer prices in February rose 8.7 per cent compared with the same month last year, driven by a 23.3 per cent jump in food costs. The sharp price rises began in mid-2007 and are blamed on shortages of pork and some other food. But economists warn that inflation pressures are spreading to other sectors of the economy.
"Prices of energy, industrial materials, and agricultural products continue to rise and will gradually exert their influence on domestic prices,'' the report said.
It said there also were signs that Chinese wages are rising, especially in manufacturing, an unwelcome development for exporters that already are struggling with a rise in China's currency, the yuan, against the dollar. That has raised the prices of Chinese goods abroad and prompted some factories to close.
Beijing is trying to boost food production and cool inflation by promising farmers more subsidies and higher payments for grain. It has frozen retail prices of grain and cooking oil, as well as gasoline, electric power and other basics.
But analysts warn that an extended price freeze could make the problem worse by discouraging farmers and others from increasing production.
"Ultimately, these price freezes will need to be replaced by targeted subsidies'' to help the poor cope with higher prices, the Washington-based World Bank said.
Chinese stocks sunk to their lowest level in nearly a year on heavy selling Tuesday by investors fretting over further tightening of monetary policies.
The Shanghai Composite Index fell 4.1 per cent, or 143.55 points, to 3,329.16, its lowest close since April 6, 2007, when it ended at 3,323.58. The Shenzhen Composite Index plunged 7.3 per cent to 1,018.03.
Investor sentiment was overwhelmingly gloomy amid expectations that authorities will raise interest rates to combat inflation, analysts said.
"The market is too weak now,'' said Wei Daoke, an analyst at Shenyin and Wanguo Securities.
