China should set less ambitious 2015 growth target, refrain from stimulus: IMF

Thu Jul 31, 2014 12:42am EDT
 
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BEIJING (Reuters) - China should set an economic growth target of 6.5-7 percent for 2015 and refrain from stimulus measures unless the economy threatens to slow sharply from that level, the International Monetary Fund said on Thursday.

Most of its directors hold that view, though some feel that an even-lower growth target is appropriate, the IMF said in the conclusion of its annual Article IV economic consultation with China.

"Regarding the growth target for 2015, while most directors concurred that a range of 6.5-7 percent would be consistent with the goal of transitioning to a safer and more sustainable growth path, a few other directors considered a lower target more appropriate," the IMF said.

The IMF repeated its projection that the economic growth would dip to 7.4 percent this year, and decelerate further to 7.1 percent next year.

The IMF cut its 2014 and 2015 economic growth forecasts for China last week. It had projected in April that the world's second-largest economy would grow 7.5 percent this year, in line with Beijing's official target, and 7.3 percent next year.

Most Chinese government economists, however, doubt Beijing would slash its growth target to below 7 percent next year for fear of undermining financial stability and market confidence.

Zhu Baoliang, chief economist at State Information Centre, a top government think-tank in Beijing, said he expected the 2015 growth target to be around 7 percent.

"We should set a target of around 7 percent for next year and maintain the target for a number of years," he told Reuters.

"But we cannot cut the target by one percentage point next year, that may have a big impact," he said, warning that a sharp lowdown could hit fiscal revenues and the financial sector.   Continued...

 
Workers install the chassis along a production line at a truck factory of Anhui Jianghuai Automobile Co. Ltd (JAC Motors) in Hefei, Anhui province May 5, 2014. REUTERS/Stringer