DAVOS, Switzerland Jan 28 China's economy will
probably grow by between 7 and 8 percent this year, as the
government's fiscal stimulus policies take hold, the World
Bank's chief economist said on Wednesday.
The world's third-largest economy will probably grow by 6 to
7 percent in the first quarter from a year earlier and average 7
percent in the remaining quarters, Justin Lin told Reuters on
the sidelines of the annual meeting of the World Economic Forum.
China, the region's second-biggest economy and the world's
third-largest, has slowed much more abruptly than analysts had
expected, as exports have gone from double-digit growth to
shrinking from their year-earlier levels in the course of
Annual economic growth slowed to 6.8 percent in the fourth
quarter of 2008, from 13 percent in all of 2007. The 9 percent
pace for 2008 was the slowest in seven years.
"The Chinese government has been very responsive to this
pressure, so I think the 4 trillion yuan ($585 billion) fiscal
stimulus will show an effect by the second quarter of this
year," Lin said.
Lin also said he thought it was unlikely that a recent
volley of comments between the United States and China on the
yuan CNY=CFXS would blow up into a trade war.
U.S. Treasury Secretary Timothy Geithner said last week that
Beijing was manipulating its currency to gain an unfair trade
advantage, comments that have been rebuked by China's central
bank and diplomats.
"Both sides have the understanding it's very important to
look forward and to solve the financial crisis, and that at this
time it's more important to stimulate economic growth," Lin
"I think it's unlikely to (lead to) a trade war, and we hope
that at this stage the most important thing is to prevent
protectionism in the world. That will be the main direction of
effort, I'm sure, on the U.S. and the Chinese side."
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(Reporting by Jason Subler; Editing by Richard Hubbard)