PARIS — The Organization of Economic Cooperation and Development’s (OECD) China economy expert Margit Molnar has said she is confident that Chinese economic growth would be around 7 percent in 2015.
Molnar, the head of China Desk of the economics department at OECD, said in a recent interview with Xinhua that Chinese stock market turmoil since June did not reflect on the country’s economic prospects.
She added all available data pointed to an orderly slowdown in the Chinese economy, dismissing rumors that real Chinese growth stood at 2 or 3 percent.
The OECD Interim Economic Outlook released on Sept 16 support’s Molnar’s opinions.
According to the report, Chinese economic growth will touch 6.7 percent in 2015. It added the direct impact of the sharp correction in Chinese share prices since June is not expected to be grave, considering share ownership rates are low and share prices are still higher than a year ago.
Molnar said Chinese authorities have taken a series of reformative measures which “are necessary to increase potential output for the medium and long-term.”
“I would say all the reformative measures are very significant. For instance, after allowing the private sector to enter the banking business, we have already seen some private banks operating since early this year,” she said.
It is also important the Chinese government recognize innovation is the only force that can guarantee growth in the medium and long-term, she added, noting the creation of enterprises in China over the past two years has been dynamic.
Data from China’s National Bureau of Administration for Commerce and Industries show that during the first period of this year, the number of new enterprises in China grew by 19.4 percent to more than two million. This means 10,000 new firms are created everyday.
Certainly, today’s China should move carefully in the face of a complicated economic situation, Molnar said. One of the biggest risks is high leverage, she said, noting government debt was manageable but corporate debt was probably very high.
According to the OECD report, the key question for China is whether expanding sectors can absorb resources fast enough to achieve official growth targets while facilitating the necessary rebalancing of the economy.
It added economic structural adjustment was not a problem only for China but for all countries around the world. All advanced and emerging countries need ambitious structural policies to encourage investment and reverse slowdowns in growth potential output.