Beijing: The World Bank on Friday maintained its growth forecast for China in 2019 at 6.2 per cent, although it lowered the country's 2020 growth figure to 6.1 per cent and said domestic demand will be key to facing economic uncertainty.
In a report, the institution said Chinese economic growth remained "resilient" with GDP growth at 6.4 per cent year-on-year in the fourth quarter of 2018 and first quarter of 2019, despite "high global uncertainty" due to slowing global growth and rising trade tensions.
The World Bank report showed how domestic demand in China slowed down in the first quarter of 2019, especially in urban areas where caution amid uncertainty has led to a decline in expenditure with respect to income, resulting in an increase in the savings rate, Efe news reported.
The World Bank believes that amid rising financial market volatility contributed to by the trade dispute between China and the US, "the People's Bank of China has maintained a prudent overall monetary policy stance".
However, it said the Chinese economy will need to rely increasingly on domestic demand to sustain rapid growth.
"Additional stimulus should be appropriately funded either directly at the central level or through additional fiscal transfers to the provinces. Higher spending on health, education and social protection could help boost demand and improve the quality of services, if combined with reforms to increase efficiency," said Martin Raiser, World Bank Country Director for China.
The institution said that in 2020 the country's economy will grow 6.1 per cent, continuing the declining trend and decreasing one tenth from the previous forecast.
The forecast for 2020 was revised downwards due to factors including "escalation in trade tensions, weaker business confidence, and slower global trade growth" that would affect exports and investments.
"Economic prospects both in China and in its trading partners would receive a significant boost from resolving the current trade disputes," added World Bank Lead Economist for China, John Litwack.