Bringing its usual reasoned calm to the issue of China’s economic direction, the World Bank just issued a report that signals continued good times for 3rd party recruitment companies, with some possible relief for hiring departments, and an ongoing challenge in retention.

The World Bank never uses the expression soft landing but that is essentially what they are suggesting. This is good for 3rd party recruitment companies because the skills demand continues, but at only a slightly reduced level. The uncertain economic sentiment expressed by the media makes candidates a little easier to close, and any serious reduction in hiring within a given industry can be balanced with continued hiring in others. Small, niche players may find it tough going.

The report is pitched to ensure confidence in the market. According to the World Bank, China’s economic growth is going into any terminal decline. Instead, it is likely to ’inch down’ from previous highs. The emphasis is on the fact that it is the growth that is likely to shave a few points, not the economy itself.

America might be in danger of a recession, but China is not.

Within individual industries the employment picture is not quite so rosy, and overall this is good for retention. The global picture is of increasing Chinese exports but much of this could be explained by rising prices for commodities, and a strengthening Renminbi.

For example, anecdotal evidence tells us that clothing exports are more difficult now, and China is the world main producer of all types of clothing and textiles. There is a lot of labor involved in this production. The production of low end products was already in danger of moving to other, cheaper countries, and the slowdown may add to this process.

A positive view of this is that low skilled workers can shift from making T-shirts to making PCBs or simple electronics. If the textile factories don’t close down the higher tech industries will find it difficult to justify investing in a market where they are having trouble finding workers. This has already happened in China.

Without in any way underestimating the size of this particular problem, a little temporary unemployment may be the cost of shifting China’s economy to a higher technology gear. There is a big emphasis on the words little and temporary. Soft landings can easily turn bad, and the consequences in China would be huge.

However, with the overall economy growing at 10% a year, and the internal economy generating a self-sustaining momentum, you might be able to play a risky game like this. With the World Bank projecting 9.6% growth in 2008, maybe now is the time to bite bullet.

Otherwise the moment may pass.