BEIJING, Mar 20: China’s economy is likely to grow around 7 percent this year and 6.9 percent in 2016 as the government pushes reforms on interest rates and the currency and pursues slower but higher-quality growth, the OECD said on Friday. China can avoid an abrupt slowdown as long as the government ensures an orderly unwinding of economic imbalances, the Organisation for Economic Co-operation and Development said in its latest survey on the world’s second-largest economy. OECD Secretary-general Angel Gurria said he also expected domestic demand will be strong enough to prevent deflation. ‘I think 7 percent (economic growth) is more sustainable, 7 percent avoids bubbles and 7 percent is attainable,’ he told Reuters in an interview.
Beijing has been trying to reduce excess factory capacity, local government debt and risks from a cooling property market, which are likely to drag growth to a quarter-century low of around 7 percent this year from 7.4 percent in 2014. ‘Imbalances in the property and some heavy industry sectors have started to unwind and while risks remain, they appear to be manageable,’ the OECD said in the survey, adding that it expected property prices to correct further until the existing inventory overhang is absorbed.
A sharper-than-projected economic slowdown economy would have global spillover effects through trade and investment channels, it said.
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China’s exports of goods and services could grow 5.5 percent this year and 6 percent in 2016, the OECD predicted. ‘A stronger U.S. dollar may adversely impact export competitiveness as long as the renminbi remains closely linked to it,’ it said.
(AGENCIES)
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