Photo: VCG

Economic activity in China has normalized faster than expected, according to the latest report published by the World Bank.

The report has attributed the pick-up growth to the country's effective epidemic-control strategy, strong policy support and resilient exports.

China's gross domestic product will grow 2 percent this year and accelerate to 7.9 percent in 2021, the report said.

"The external environment is expected to remain challenging and highly uncertain," said the report, echoing China's tone-setting economic meeting that concluded Friday, saying that the country still faces external uncertainties amid the changing epidemic situation, and the nation's economic recovery is not yet solid.

The report suggests navigating near-term uncertainty by adopting an adaptive policy framework calibrated to the pace of the recovery both in China and the rest of the world.

"A premature policy exit and excessive tightening could derail the recovery," said the report. "Along with a flexible and supportive monetary policy, China could use its fiscal space to hedge against downside risks to growth and ensure a smooth rotation from public to private demand."

The report called for the country to shift fiscal focus from traditional infrastructure investment to more social spending and green investment for a greener and more inclusive growth.