by Staff Writers
Beijing (AFP) May 29, 2013
The International Monetary Fund cut its 2013 growth forecast for China to "around 7.75 percent", a top official said Wednesday, citing a sluggish global recovery which hurt exports.
The organisation had previously predicted growth of 8.0 percent in the world's second-biggest economy this year.
"The Chinese economy is expected to grow at around 7.75 percent this year and at about the same pace next year," David Lipton, IMF first deputy managing director, told reporters in Beijing.
China is seen as a potential driver of global recovery in the face of the eurozone's ongoing debt crisis and unsteady growth elsewhere.
But China's economy grew 7.8 percent in 2012 -- its slowest pace in 13 years -- and registered a surprisingly weak 7.7 percent expansion in the first three months of this year, well below forecasts.
The IMF's World Economic Outlook report released last month had forecast Chinese growth of 8.0 percent this year and 8.2 percent for 2014 -- both of those predictions themselves reductions from previous ones made in January.
Lipton said weakness in the global economy was a factor in slowing Chinese export growth.
The lowered gross domestic product forecast "comes essentially from looking at the global economy and the pace of growth in the global economy and the demand that derives from that growth for Chinese exports", he said.
"Chinese export growth has been, after years and years of very rapid growth, very slow because of the state of the global economy and we now are taking our projections of the global economy into effect."
Lipton was speaking at the conclusion of regular IMF consultations with the Chinese government, which included meetings with Chinese Vice Premier Wang Qishan and central bank governor Zhou Xiaochuan.
Alarm bells over prospects for China were raised last week when a closely watched private survey of its manufacturing sector indicated contraction for the first time in seven months.
The figure helped trigger a sell-off in Japan's stock market that in turn pushed global bourses lower.
British banking giant HSBC's preliminary purchasing managers' index fell to 49.6 this month from a final 50.4 in April, putting it below the 50 mark that indicates contraction. A reading above signals expansion.
The Chinese government announces its official PMI figure for May on Saturday, while HSBC's final reading is due out Monday.
The IMF forecast remains above China's own central government growth target for 2013 of 7.5 percent, the same as last year's.
China's new leaders are trying to retool the economy to emphasise consumer demand as the key growth driver, rather than the investment and exports that fuelled sometimes double-digit yearly rises in recent decades.
Ren Xianfang, a Beijing-based economist with research firm IHS Global Insight, said that the change in rhetoric "may have played quite a big role in affecting expectations".
"There has been a significant change in the direction of the government's macro policy making," she said. "Maintaining the growth rate at above 7.8 percent or 8.0 percent may no longer be a must-do for the government."
Lipton described the lowering of the IMF forecast as "modest".
"Let's not lose sight of the fact that China is still growing at a very fast rate," he said, adding: "We're projecting that growth will remain robust."
He also said that the economy "should pick up moderately in the course of the second half of this year, as the recent credit expansion gains traction and in line with a mild pick-up in the global economy".
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