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IMF raises 2016 Chinese economic growth forecast

Updated: Jul 27,2016 4:43 PM

The International Monetary Fund (IMF) raised its forecast for the 2016 Chinese economy growth, while cutting the global growth forecast to 3.1 percent from the 3.2 percent projected in April, according to Xinhua News Agency.

China’s economy is expected to rise 6.6 percent in 2016, up 0.1 percent compared with April’s forecast, according to the World Economic Outlook updated on July 19. “We have witnessed the determined and decisive implementation of reforms, and there was also support given to the economy in order to encourage growth,” said Christine Lagarde, managing director of IMF.

It is reasonable for the international community to trust the Chinese economy. In the first half of 2016, China’s GDP rose 6.7 percent, a stable growth that met expectations. It is notable compared with other economies in the world. And more important, the growth is based on upgrading economic structure and stable employment, which is beneficial for future development.

For example, the service sector is growing fast, ranking as the largest industry in the economy. It has become a major impetus to economic development and employment. In addition, domestic demand and consumption have been expanding, becoming the main driver of economic development.

An audit of the Chinese economy in the first half of the year shows positive signs, despite still facing some challenges. The cost of economic transformation, including the glut of some industrial products and unbalanced performance of different industries and regions, are some of the issues. For instance, profits in the high-tech manufacturing industry rose 17.1 percent from January to May, while profits in the coal and petrochemical industry fell more than 70 percent and 50 percent, respectively, according to data from the Ministry of Industry and Information Technology.

In the second half, the world economy will still see sluggish growth. There will be pressures from economic downturn for the Chinese economy and more dilemmas in macro policies.

But some analysts are confident of the long-term growth of the Chinese economy. According to Sheng Laiyun, a spokesperson for the National Bureau of Statistics, urbanization and industrialization in China is still ongoing, social consumption is expanding rapidly, and there are remarkable financial and human capitals, all of which serve as a solid foundation for a long-term growth.