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China's growth target achievable, more reforms needed: IMF

Xinhua | Updated: 2017-03-10 09:24

WASHINGTON - China's current strong economic momentum is likely to maintain its growth target of around 6.5 percent for 2017, but the country needs implement more reforms to embark on a more inclusive and sustainable growth path, the International Monetary Fund (IMF) said on Thursday.

"We continue to advise less focus on high GDP growth targets, and more focus on tackling excessive credit growth, hardening budget constraints on State-owned enterprises and boosting the social society system," Gerry Rice, spokesperson for the IMF, told Xinhua at a regular press briefing.

In a government work report released Sunday, China set its GDP growth target at around 6.5 percent for this year, lower than a target range of 6.5-7 percent last year, but in line with the IMF's latest growth forecast in January.

The lower GDP growth target means "the government accepts a slightly slower growth rate in the effort to rein in the financial risks building up in the system," said David Dollar, a former World Bank official and senior fellow at the Brookings Institution, adding the lower growth target for money supply this year should also help stabilize the level of leverage in the economy.

"More broadly, the work report highlighted China's efforts to maintain flexibility, guiding the economy toward a more inclusive, environmental friendly and sustainable growth path, and the determinant of implementation of those reforms to achieve this path," Rice said.

The IMF spokesperson also said current capital outflows from China didn't pose a concern to the world's second-largest economy. "I think the capital outflow would only become a concern if it would give rise to a disorderly adjustment in the exchange rate and the economy more broadly, and we don't see such a concern warranted right now," he said.

In terms of the exchange rate, the government work report said China will continue market-oriented reform in the renminbi exchange rate mechanism and maintain the currency's stable position in the global monetary system in 2017.

Dollar believed this was consistent with recent efforts by the People's Bank of China (PBOC), the central bank, to keep the renminbi, or yuan, relatively stable with respect to a basket of currencies. "In the first two months of 2017, expectations about the yuan seem stable and the reserve level has hardly moved," he said.

China's outstanding forex reserves stood at $3.0051 trillion by the end of last month, slightly up from 2.9982 trillion dollars a month earlier, according to data from the PBOC.

"If the dollar continues to appreciate then I would expect to see some modest yuan depreciation against the dollar plus appreciation against the euro and other currencies," Dollar said.

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