China has been leading economic growth in developing East Asia, with exports and employment returning to levels before the global economic crisis, according to a report from the World Bank Wednesday.

The Washington-based institution said in its twice-yearly East Asia and Pacific Economic Update that "China strongly influenced developments in the region" with its monetary and fiscal stimulus policies limiting the slowdown.

It said demand in China, where GDP growth was an estimated 8.7 percent last year, "expanded markedly, giving a timely boost to imports from the region in the first half of the year."

GDP growth in developing East Asia was poised to hit 8.7 percent this year after slowing from 8.5 percent in 2008 and 7 percent last year, said the report, subtitled Emerging Stronger from the Crisis.

"Take China out of regional averages... and growth in the rest of developing East Asia was a mere 1.3 percent in 2009," it said.

However, it also warned against the rapid withdrawal of economic stimulus policies and said the rebalancing of China's economy away from export-led growth toward expansion of the service sector and greater private consumption would be "key" to sustainable growth.

"Unbeknownst to many, private consumption made a significant contribution to China's economic growth in 2009, or 2.8 percentage points to be exact," said the report.

It said the contribution of private consumption to growth had been the highest in the region and far higher than in the United States.

"Such a high contribution has been made possible by the productive capacity resulting from massive fixed investment and rapid export growth."

The report said the global financial crisis and economic slowdown were "challenging some of the foundations of China's current growth model" with a growing wealth gap and inadequate health, education and social support for the poor.

"For all its successes, the existing pattern of growth is energy- and natural resource-intensive, environmentally unsustainable, and does not create enough urban jobs."

The report said the region's two medium-term priorities should be addressing climate change with a shift to green technologies and energy efficiency, and greater economic integration was needed to break down trade barriers and increase competitiveness

"The region has enormous scope to move rapidly towards the green technology frontier," said economist and principal author of the report, Ivail Izvorski.

"This will not only improve the livability and sustainability of East Asia's ever growing cities, it will also give the region a competitive advantage in an industry poised for rapid growth."

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