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Summary
The World Bank annual report Global Economic Prospects 2010 says the Chinese economy is projected to continue to lead global growth in 2010, at a pace of 9.0 percent that would dwarf the global rate of 2.7 percent. The lead author of a World Bank report on the global economy published Wednesday said the bank sees signs of bubbles in the Chinese economy, a problem he said the Chinese government acknowledges. We can already see some signs of bubbles and signs of tensions in the Chinese economy, in particular in the housing sector, said Andrew Burns, head of the bank's macroeconomic forecasting, at a news briefing Tuesday under embargo until the report was released late Wednesday in Washington. The notion that asset bubbles are forming in China is controversial. Some economists say that a boom in housing prices in Beijing and other major cities reflects a bubble, while others say that signs of an overheating economy do not presage the bursting of a bubble. Burns noted China's low domestic interest rate and the particular nature of its fiscal stimulus, saying they were putting strains on the economy and forcing the government to step back.Hans Timmer, director of the bank's group that produces the report, said at the news briefing that it is true that there are vulnerabilities of too much stimulus in China, and the Chinese authorities are very aware of that.
