Beijing's economic growth targets are too high, IMF says
Bank says goal of 7.5 per cent for this year will be met, but long-term expansion may be at risk
The International Monetary Fund has urged Beijing to lower its growth target next year but forecasts China is likely to meet its annual target of "around 7.5 per cent" this year.
The IMF, as well as Fitch Ratings, yesterday warned China about the risks of relying on credit and investment expansion to defend a targeted growth rate at the cost of creating prolonged structural weakness in the economy.
A target growth rate of 6.5 to 7 per cent for 2015 "would be consistent with the goal of transitioning to a safer and more sustainable growth path", the bank said in a statement after its executive board concluded its annual consultation with China.
It said that was the view of most of its directors, but a few others believed a lower target might be "more appropriate".
The bank also suggested China should not pursue "broad-based stimulus" unless "growth risks slow significantly below the authorities' target".
China remains heavily reliant on capital spending and credit, which has sustained rapid growth. But "declining efficiency of investment, a significant buildup of debt, income inequality and environmental costs are threatening growth prospects", the IMF said.