The World Bank on Wednesday lowered its forecast for China’s GDP growth this year to 6.5 per cent, down from 7.5 per cent it predicted at the end of November last year, following a huge drop in exports and shrinking private sector investment.
The downgrade widens the gap between domestic estimates, which overwhelmingly predict that the country will hit its official target of 8 per cent growth this year, and more pessimistic forecasts from international economists.
In a survey of 73 Chinese economists published last month by the National Statistics Bureau, fewer than one-third said they expected GDP to grow less than 8 per cent this year.
The average forecast was exactly 8 per cent, according to the survey.
Few economists outside of China or working for international organisations expect growth to be that high and some believe the government’s emphasis of the 8 per cent figure could have adverse effects on the quality of China’s growth.
They say the constant repetition of the government’s target could lead officials at lower levels to falsify statistics or, more worryingly, to do whatever it takes to meet growth targets through wasteful and redundant infrastructure projects.
The World Bank praised China on Wednesday for its efforts to date to stimulate the economy but warned that exports were likely to shrink this year and government spending would not be able to take up the slack from falling market-based investment.
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