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.
Inflation will stay modest, probably at 2.7 per cent for the full year, despite a rise in February, he said.
The OECD's secretary-general, Angel Gurria, said: "The gradual pick-up in activity provides a strong background for the ambitious reforms China needs to put in place to continue on the road to prosperity."
He called on Beijing to deregulate interest rates, progressively raise quotas for foreign institutions to invest in domestic capital market, substantially raise the annual quotas for new building land to reduce pressure on property prices, and improve exchange rate flexibility.
Yang Weimin, vice-minister of the mainland's Central Leading Group on Financial and Economic Affairs, said the OECD forecast was probably too high and questionable.
He said the government would focus more on quality than speed.