publication May 31, 2018

China Economic Update - May 2018

Latest Issue: 
  • May 2018

World Bank Group

Key messages

  • Economic activity in China remains resilient, with GDP growing by 6.9 percent in 2017 and 6.8 percent in the first quarter of 2018.
  • While consumption continues to drive growth, investment growth has rebounded from the lows in 2017, particularly in the private sector.
  • However, the long-term trend is slower investment growth accompanying slower economic growth, as an important part of China’s “new normal” is the process of rebalancing away from investment toward consumption.
  • Even with the slowdown, investment is still high by international standards, so China’s main challenge is not to raise the growth rate of investment, but to ensure that it goes to sectors and firms that are more productive.
  • Looking ahead, GDP growth is projected to moderate to 6.5 percent in 2018 and an average of 6.3 percent in the following two years. The main risks to the outlook are high corporate indebtedness and rising trade tensions.
  • One of the special topics in the report looks at soil remediation. A step-by-step remediation and redevelopment strategy, which links contamination extent and future land use, could lead to cost savings of up to 80 percent and high health and ecological benefits.