Mumbai: China`s gross domestic product (GDP) will grow at 11.3 per cent in 2007, but below 11 per cent in 2008, the World Bank said in its China Quarterly Update.

The bank, however, suggested more fiscal and structural policy measures to rebalance economic growth in China.

China`s GDP expanded 11.9 per cent in the second quarter this year, lifting first-half (January-June) growth to an impressive 11.5 per cent.

China`s macroeconomic prospects remain good, it said, noting that there are no indications that cost pressures are reducing the competitiveness of China`s exports.

Consumption is expected to remain solid although higher inflation is constraining real consumption growth, the report added.

Profit and credit growth are high, so investment is likely to continue to expand strongly, it noted.

The World Bank expects the consumer price inflation in China to gradually ease from end-2007, although there are upward risks.

The report also projected a current account surplus of around 12 per cent of GDP in 2007.

China`s economic growth remains rapid and the trade surplus continues to widen, while the pattern of growth remains unchanged.

The US, meanwhile, has launched five separate investigations into Chinese products, including art paper, steel pipe and tyres, since last November, affecting 500 Chinese companies and costing $860 million in exports. China and the United States have also seized a number of products deemed unsafe from each other this year.

China announced last month that it had returned 272 heart pacemakers imported from the United States after they failed quality inspections. China also seized orange pulp and dried apricots from the US that it said contained excessive bacteria, mildew and sulphur dioxide.

In a special section, the quarterly update of the World Bank addressed the issue of whether China is running the risk of labour shortage.

The report said while continued rapid growth would eventually exhaust China`s surplus labour, a key ingredient in its competitiveness, this is unlikely to happen soon.

News reports, however, have focused attention on China`s possible emerging shortage of workers. Guangdong province, one of China`s main manufacturing centres, claims some 2.5 million unfilled job vacancies. Other provinces such as Jiangsu, Shandong and Zhejiang also report facing labour shortages.


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