OECD predicts 8.5pc growth in China this year

The Organisation for Economic Co-operation and Development said yesterday that it expected growth on the mainland would reach 8.5 per cent this year and 8.9 per cent in 2014, though it urged Beijing to launch reforms in financial and land systems for a more sustainable and greener economy.

In its third Economic Survey of China, released yesterday, the OECD said China was on course to become the world's largest economy in 2016.

The institution's growth estimate, however, was more optimistic than Beijing's own target for a 7.5 per cent growth this year and was also higher than the prediction given by the International Monetary Fund.

Markus Rodlauer, the IMF's mission chief for China, forecast yesterday that the mainland was on a path to 8 per cent growth. He repeated the fund's position that the yuan was "moderately undervalued".

Richard Herd, the head of OECD's China research and the main author of the survey report, said Beijing's official target should be understood as "a floor of growth" rather than actual performance.

Despite global headwinds that weigh on mainland exports, Herd said growth would accelerate from last year's 7.8 per cent thanks to an easier monetary policy adopted since last year, a higher financial deficit planned for 2013, and a pick-up in infrastructure investment.