(Yicai Global) July 29 -- China’s economic growth could bounce back to 7.9 percent next year, the fastest rate of growth since 2012, if the government continues to focus on inclusive and sustainable policies, according to a report released by the World Bank today.

The country’s gross domestic product this year is likely to shrivel to 1.6 percent, the lowest level since 1976, according to the report Leaning Forward – Covid-19 and China’s Reform Agenda said.

“While risks are exceptionally high, they can be partially mitigated by good policies,” said Martin Raiser, the bank’s country director for China.

“The pandemic shock has exposed deeply connected economic, social and environmental fragilities, further increasing the urgency of rebalancing the economy toward more inclusive, sustainable and greener growth. The recovery offers an opportunity to accelerate progress towards these goals,” Raiser added.

“On the downside, recurrent Covid-19 flareups could continue to disrupt economic activity, despite efforts to suppress the spread of the virus. Externally, a deeper and more protracted global recession and escalating bilateral tensions between China and some of its main trading partners could also derail the recovery.

“On the upside, the downturn could be less severe if domestic and global confidence recover faster than anticipated, and if economic tensions de-escalate,” the report said.

“Enhancing market competition and reform of the hukou, or household residency registration, system could help unleash a stronger market response, facilitate adjustment to post-Covid-19 economic realities, and support China’s longer-term growth prospects,” it added.

Editor: Kim Taylor