BEIJING: The International Monetary Fund on Tuesday maintained its growth target for China at above eight percent for this year and next, despite a slowdown in the world's second largest economy.
"In China, even with the drag from external demand, growth is projected to be above eight percent in 2012 and 2013 because consumption and investment are expected to remain robust," the fund said in its global economic forecast.
It said the economy was expected to grow 8.2 percent this year -- above the Chinese government's target of 7.5 percent -- and 8.8 percent in 2013, echoing predictions made in January.
Growth in China has slowed recently, falling to 8.1 percent in the first quarter from 9.7 percent a year earlier as domestic demand drops and Europe's debt woes curb business activity.
In an official acknowledgment that the export-driven economy is slowing, the government in March cut its economic growth target for this year to below eight percent for the first time since 2004.
But analysts have predicted that China will avoid a hard landing, with growth expected to rebound towards the end of the year as Europe's economic outlook brightens and existing loosening measures kick in.
However the IMF warned that the nation's slowing real estate sector and a weak export market would continue to pressure growth.
"These appear manageable on their own, but a large external shock could bring these risks to the fore, precipitating a decline in investment and activity in China which could have implications for its trading partners," it said.
The Fund added that monetary easing would remain limited as China is "still working through its previous credit expansion".
The central bank has cut the amount of cash banks must hold in reserve twice in four months as policymakers look to increase lending and boost domestic consumption, but analysts have called for further easing.
The IMF also stressed the need for China to" rebalance growth by strengthening domestic sources of demand over the coming years" -- a key Beijing policy as it seeks to limit the country's heavy reliance on exports.
China said Saturday it would allow its yuan currency to fluctuate one percent above and below a daily midpoint -- double the previous 0.5 percent.
IMF chief Christine Lagarde described the move -- which comes as Beijing faces criticism that it keeps the unit artificially low -- as "important" and said it underlined "China's commitment to rebalance its economy toward domestic consumption".
A higher exchange rate for the yuan should allow China to import more goods and ease ongoing tensions with its main trading partners.
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