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World Bank Urges China Not to Withdraw COVID-19 Relief Stimulus as 'Precarious' 2021 Outlook Looms

© AFP 2023 / WANG ZHAOA general view shows the skyline of a central business district in Beijing
A general view shows the skyline of a central business district in Beijing - Sputnik International
The Washington-based banking institution called on authorities in Beijing to continue financing key initiatives in the global fight against the ongoing coronavirus pandemic, namely as economies struggled amid lockdowns and measures aimed at suppressing the virus.

China should avoid withdrawing fiscal support aimed at global efforts to tackle the ongoing coronavirus pandemic due to the "precarious" global crisis estimated in 2021, the World Bank Group said on Wednesday.

The global environment remained "highly uncertain" and demanded an "adaptive policy framework", Martin Raiser, World Bank country director for China said in a statement.

“A premature policy exit and excessive tightening could derail the recovery. The withdrawal of fiscal support should proceed gradually, but the focus should shift from traditional infrastructure to more social spending and green investment,” he said.

The Group also noted economic activity in the mainland had "[normalised] faster than expected, aided by an effective pandemic-control strategy, strong policy measures and buoyant exports".

But challenges included an uneven recovery and a slow domestic demand compared to production, along with slower consumption rates compared with investment, according to a report published on Wednesday.

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The bank's China Economic Update report found China's economy had rebounded to 7.9 percent due to the measures and efforts to roll out a "swift and widespread rollout" of a COVID-19 vaccine could boost economic confidence and growth.

But "persistent" rows over trade and technology with global powers could cause further risks to its economic recovery, it read.

Hopes over a vaccine rollout across China could help boost the country's gross domestic product up to 8.5 percent next year, Ma Jun, senior advisor to the People's Bank of China, echoed in similar comments in an interview with Market News.

China's post-COVID-19 economic growth is estimated to grow after it surpassed the US as the largest foreign market for Asia-Pacific firms, reaching 29 percent compared to the US's 28 percent, a report from HSBC Holdings Plc found in December.

Beijing also inked the 15-member Regional Cooperative Economic Partnership in November valued at $26.2tn, or the world's largest free trade agreement in history, with regional partners such as Vietnam, New Zealand, Australia, Japan and others.

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