WEF expresses concerns over sustainable growth in China

The World Economic Forum (WEF), which meets in Davos this month, has flagged China as an area of concern, partly because of Beijing’s response to the global financial crisis, the Financial Times reported. The WEF’s global risk report puts the chances of a serious economic slowdown in China at above 20%. It estimates such an occurrence would lead to economic losses of between US$250 billion and US$1 trillion – and this doesn’t take into account China’s role in areas such as funding developing country deficits and as the primary consumer of exports generated by its Southeast Asian neighbors. The report notes that Beijing’s reliance on high credit growth risked mimicking the asset price bubbles and unbalanced growth seen in the West prior to the financial crisis. “China is on a very unbalanced path of economic growth,” said Daniel Hofmann, group chief economist at Zurich Financial Services.