Economic indicators are pointing to a soft landing for the Chinese economy, and "do not signal an immediate hard landing," the World Bank said in its latest East Asia and Pacific Economic Update released on Tuesday. The report also indicated that growth will be affected by developments in Europe and the global economic slowdown.

The leading indicators projected further softening for China in the coming six to 12 months with consumption offering resilience, but do not signal an immediate hard landing, the bank said in the report.

China's growth is expected at 9.1 percent this year, 8.4 percent in 2012 and roughly similar rates thereafter, the lender said. The growth forecast for this year was slightly higher than the previously projected 9 percent.

Inflation is likely to recede but will remain elevated at 5.3 percent this year and 4.1 percent in 2012, the report noted. Apart from base effects, inflation will be affected by weakening of growth, the fading of earlier food price impulses and the policy-induced cooling of the property market, according to the lender.

Further, the report noted that the current account surplus is likely to narrow from 5.2 percent of GDP in 2010 to 3.5 percent and 3 percent in 2011 and 2012, reflecting the anticipated decline in the trade balance and a smooth appreciation in the exchange rate.

The fiscal balance is seen at 2.1 percent for 2011 and this leaves space for further stimulus should the need arise. To mitigate the vulnerabilities of continued low real interest rates, an easing of fiscal policy appears the most appropriate line of defense before the monetary policy stance is eased, the report suggests.

Regarding the growth outlook for East Asia, the World Bank said the region's prospects are constrained by global uncertainties and the impacts of natural disasters. The slow progress towards resolution of debt problems in the Eurozone intensified investors' concerns over global growth and stability.

Amid uncertainties in Europe and a global growth slowdown, real GDP in developing East Asia is forecast to increase by 8.2 percent and 4.7 percent excluding China in 2011. Next year, growth is expected to be at 7.8 percent.

Fiscal positions, though not as strong as before the 2008 crisis, leave sufficient space for fiscal stimulus in most middle income countries should this become necessary, the report noted. However, stimulus alone will not be enough given the outlook for protracted low global growth, it said.Growth in East Asian countries is moderating, mainly due to weakening external demand. This, according to the lender, underscores the need for governments to refocus on reforms to increase domestic demand and productivity.According to the report, the region's growth slowdown was more pronounced in industrial production. Exports of major regional industrial supply chains, especially electronics, have started to decline. Demand for commodities and raw materials remained strong, helping resource-rich economies to maintain high levels of export and GDP growth.

However, high reserve position and current account surpluses will protect most countries in East Asia against the impact of possible renewed financial stress, World Bank Chief Economist Bert Hofman said.

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