Global economy in danger zone,China must hasten reforms

World Bank Chief Robert Zoellick has asked the Chinese government to hasten planned structural reforms to shift the focus of its export-driven economy.

World Bank Chief Robert Zoellick has asked the Chinese government to hasten planned structural reforms to shift the focus of its export-driven economy toward domestic consumption-led growth as the global economy entered a new danger zone this autumn.

The bigger challenge for China in the autumn is if events in the global economy lead to a deeper downturn that affects demand for Chinas exports, Zoellick,currently touring China,was quoted by state-run China Daily as saying.

China needs to be thinking about the structural basis for future growth. The world economy is entering a new danger zone this autumn. Chinas structural challenges occur in the current international context of slowing growth and weakening confidence, he told a conference here.

He said global economic indicators make for a bleak reading. A monthly report by the European Commission showed that business and consumer confidence in the euro zone for August slid to its lowest level since May,2010. A report by the White House also predicted that US GDP growth will remain between 1.7 per cent and 2.1 per cent in 2011.

Earlier predictions had put it at 2.7 per cent. The report also said that the unemployment rate would stand at 8.8 per cent to 9.1 per cent this year in the US.

Zoellick started a five-day visit on September 1,his fifth since he assumed office in July,2007. The main reason for the visit is to discuss key medium-term challenges with government officials.

Given the gloomy prospects for developed economies,many economists lowered the expectations for Chinas growth this year. UBS,a global financial services firm,reduced its 2011 forecast for Chinas GDP growth to 9 per cent from 9.3 per cent and from 9 per cent to 8.3 per cent in 2012. Statistics from Chinas Federation of Logistics and Purchasing showed that the countrys purchasing managers index gained 0.2 points in August to 50.9. This reversed a four-month decline and,according to economists,indicated a soft landing for the economy.