IMF adjusts China growth forecast to 8pc this year

June 10, 2012
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Wang Qishan (R) meets with the IMF's David Lipton/XINHUA
BEIJING, Jun 10 – China’s economic growth will likely moderate to around 8 percent this year amid downward risks caused by the ongoing crisis in Europe, an official from the International Monetary Fund (IMF) said on Friday.

In April, the IMF predicted an annual growth of 8.2 percent for China. David Lipton, First Deputy Managing Director of the IMF, who is in Beijing for annual policy dialogue with China, told Xinhua that the latest revision is still a comfortable growth for China under the current circumstances.

He said though it’s hard to tell the impact that the European crisis will have on other countries, it’s important that China and other countries be ready and attentive to the possible outcomes.

He said China has the space for a forceful response if the world economy further slows and then affects the Chinese economy, stressing that the stimulus measures, if necessary, should align with the goal of quality growth that relies less on investment, more on consumption, and is environmentally friendly.

Noting China’s recent announcement of an interest rate cut, he said the move reflected the authorities’ commitment to achieving their macroeconomic objectives in the face of slowing growth and increased downside risks, especially from Europe.

“We also welcome China’s step toward the liberalization of interest rate margins, which will lower the cost of financial intermediation and allow market forces a greater role in pricing loans,” said Lipton.

He added that to realize balanced growth, China should also step up reforms to raise household income, liberalize the financial system, strengthen the social security system.

“These priorities also feature in the 12th Five-year Plan, but timely implementation will be the key,” he said.

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