IMF Says China Should Lower Ambitions, Refrain From Stimulus
Marc Maligalig | | Jul 31, 2014 10:50 AM EDT |
(Photo : REUTERS) Chinese workers in a laptop accessory factory
The International Monetary Fund said Thursday that China should lower its economic growth target and not use stimulus measures unless necessary.
The majority of the IMF's directors believe that the target for economic growth of China should be lowered to 6.5 to 7 percent while others feel an even lower number is more appropriate, the IMF said in the Article IV economic consultation with the country, according to MacroBusiness.
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The IMF predicts the country's economic growth to decrease to 7.4 percent by the end of this year, and dip to 7.1 next year.
The international organization cut China's forecasted economic growth for 2014 and 2015 last week. Earlier in April, the organization extrapolated that the second largest economy in the world would expand to 7.5 percent, close to Beijing's official target, and 7.3 percent in 2015.
Most government economists in the country, though, do not believe that Beijing would decrease its goal to under 7 percent in 2015, dreading that it will subvert its market confidence and financial stability.
State Information Centre chief economist Zhu Baoliang said the country anticipates a growth figure of 7 percent.
"We should set a target of around 7 percent for next year and maintain the target for a number of years," Zhu 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 low-down could hit fiscal revenues and the financial sector."
The 2015 target would not be announced by Beijing until early next year.
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