China to drag down growth in developing Asia: World Bank

China is in the midst of reforms as it moves to make domestic consumption a key economic growth driver instead of exports and as manufacturing gives way to services taking on a bigger role in the economy.

"Continued implementation of reforms should support the continued rebalancing of domestic demand," the report said on the Chinese economy.

"In particular, growth in investment and industrial output will moderate, reflecting measures to contain local government debt, reduce excess industrial capacity and reorient fiscal stimulus toward social sectors." Victoria Kwakwa, incoming World Bank East Asia and Pacific vice president, said in a statement that the region's developing countries accounted for "almost two-fifths of global growth" last year.

"The region has benefited from careful macroeconomic policies, including efforts to boost domestic revenue in some commodity-exporting countries. But sustaining growth amid challenging global conditions will require continued progress on structural reforms," she said.

The forecasts were made against a backdrop of slowing world growth, weak global trade, low commodity prices and volatile financial markets, with China's economic slowdown a major drag.

Excluding China, regional growth is projected to pick up from 4.7 percent last year to 4.8 percent this year and 4.9 percent in 2017 and 2018, powered by Southeast Asia's robust economies, the bank said.

"Among the large developing Southeast Asian economies, the Philippines and Vietnam have the strongest growth prospects, both expected to grow by more than 6.0 percent in 2016," it said.