Forecast Revised

The International Monetary Fund (IMF) on July 24 revised up its growth forecasts for China in 2017 and 2018 to 6.7 percent and 6.4 percent respectively.

The updated World Economic Outlook report, which came days after China posted a strongerthan-expected second quarterly performance, was a reflection of a solid first quarter underpinned by previous policy easing and supplyside reforms, including efforts to reduce excess capacity in the industrial sector, the IMF said.

But the IMF also warned against strong credit growth that may come with rising downside risks to medium-term growth.

Maurice Obstfeld, chief economist of the IMF, recommended China go through a rebalancing process, which will inevitably entail a slowed growth path. He said China’s recent moves to redress non-performing loans and a coordinated financial oversight overhaul are welcome. Communist Party of China Central Committee on July 24.

The meeting stressed that a proactive fiscal policy and prudent monetary policy with supply-side structural reform as the main theme will be implemented in the latter half of the year.

Authorities will maintain the continuity and consistency of policies to ensure sound and stable economic growth, push forward supply-side structural reform and guard against systemic financial risks, according to a statement released after the meeting.

The meeting pledged firm measures to push for progresses on excess capacity cuts, inventory reduction, deleveraging, relieving corporate burdens and fixing weak links, and more efforts to deal with “zombie enterprises,” or unprofitable firms burdened by debt, mismanagement or overcapacity.