BEIJING May 6 China's economic growth is likely
to slow to 7.4 percent in 2014 from 7.7 percent last year due to
the government's drive to curb credit risk and excessive factory
capacity, the OECD said on Tuesday.
In November, the Organisation for Economic Co-operation and
Development had predicted China's economic growth could
accelerate to 8.2 percent in 2014.
The OECD attributed the slower growth forecast to Beijing's
efforts to rein in the shadow banking sector, overcapacity in
such industries as steel and cement and a cooling property
market. Many real estate developers and local governments have
relied on shadow banking credit such as trust loans and other
forms of off-balance sheet borrowings to stay liquid.
China's government has in recent weeks hastened construction
of railways and affordable housing and cut taxes for small firms
in a bid to support the slowing economy, but Premier Li Keqiang
has ruled out any forceful measures.
"Investment may slow more than projected if the supportive
measures fail to counterbalance the effects of the phasing out
of excess capacity and the anti-corruption campaign," the OECD
"Consumption may also surprise on the downside if a cooling
property market were to damp housing-related spending and weak
income growth were to curtail spending on durables."
The latest Reuters poll showed China's growth could slow to
7.3 percent this year, the weakest showing in 24 years and
slower than the official target of 7.5 percent.
Beijing's efforts to tackle factory overcapacity and
pollution have hit output, while a sustained anti-corruption
campaign has hurt consumption, especially of high-end goods.
The government is trying to restructure the economy so it is
driven more by consumption than the traditional engines of
exports and investment, but wants to avoid a sharp slowdown that
could fuel job losses and threaten social stability.
"The pace of structural reforms will influence short-term
outcomes, the challenge being to keep up sufficient momentum to
reduce imbalances whilst avoiding overly abrupt adjustments that
might trigger a crisis," the OECD said.
The OECD predicted China's consumer inflation will ease to
2.4 percent in 2014 from 2.6 percent last year.
The volume of China's exports of goods and services will
grow 7.5 percent in 2014, slowing from 8.6 percent last year,
while import growth could ease to 9.2 percent from 10.7 percent.
China's current account surplus as a share of GDP could
shrink to 1.2 percent in 2014 from 2 percent last year, it
(Reporting by Kevin Yao; Editing by Jacqueline Wong)