China must promote new growth engines and intensify its economic reforms, advocates a World Bank report published on Tuesday, against the backdrop of an economic slowdown and the Sino-American trade war.
After three decades of strong growth, largely driven by the export of low-cost manufactured products, the Asian country has seen the pace of its GDP growth slow down since 2010.
It reached 6.2% in the second quarter of 2019 over one year, its weakest performance in at least 27 years. And this, despite the support measures launched by Beijing and efforts to refocus the economy on domestic consumption and services.
“China has considerable room for maneuver to continue its process of economic catch-up,” said the report, the fruit of collaboration between the World Bank and a think tank of the Chinese government.
But “the old growth engines (…) are running out of steam”, points out the document which stresses in particular the importance of promoting innovation and encouraging new technologies – in particular to develop the digital economy , expanding.
“Eliminating remaining distortions in the economy and reducing barriers to market competition are crucial,” said Victoria Kwakwa, World Bank vice president for East Asia and the Pacific.
Beijing, mired in 2018 in a trade war with Washington, is regularly asked by US President Donald Trump for structural reforms to guarantee a level playing field for foreign firms.
This trade confrontation, which is hitting the Chinese economy hard, has already resulted in the reciprocal imposition of customs surcharges on billions of dollars in annual trade.
The World Bank report also recommends greater support for Chinese private SMEs and reform of often unprofitable state-owned enterprises.