Beijing: The Asian Development Bank has scaled down this year's growth forecast for China to 7.6 percent from previous estimate of 8.2 percent due to weak domestic demand, softening industrial rebound and sharp downturn in foreign trade.
In April, the ADB had predicted the Chinese economy would grow at 8.2 percent. However, it had cut its forecast down to 7.7 percent in July.
In its latest report issued today, the Manila-based lender estimated that China would post a 7.4 percent growth rate in 2014 predicting that the slowdown would continue for next year as well. The declining GDP highlights the need for quickening the structural reforms, it added.
China's economic slowdown is the cost of its economic restructuring, and the government's latest moves to control credit bubbles and shadow banking showed that the current slowdown can benefit the country's long-term sustainable development, the ADB said.
China revised down its 2012 economic growth to 7.7 percent, the slowest pace in 13 years.
The government has set China's full-year economic growth target at 7.5 percent for this year.
"Moderating growth in the Peoples Republic of China (PRC) is the price of structural reform as authorities engineer a medium-term transition to a more sustainable growth path than one led by exports and investment," ADB's Chief Economist Changyong Rhee said.
"However, this growth deceleration could impact the rest of Asia, especially East and Southeast Asia, since the PRC?s economic influence has grown in the past decade," an ADB press release quoted him as saying.
The first-half growth in 2013 of 7.6 percent was below projections, with weaker domestic demand, a softening of 2012 industrial rebound, and a sharp downturn in foreign trade.
Export growth slipped from 18.3 percent in the first quarter to just 3.7 percent in the second quarter, on the back of still anaemic global demand. Services remained the main driver of growth. In the third quarter, some signs of a rebound in domestic demand, industrial production, and trade are emerging, ADB said.
Authorities must continue with structural measures to help lift the economy, putting greater emphasis on domestic consumption and less on investment, it said.
The Chinese government will have to carry out a delicate balancing act of encouraging sustained growth through reforms and stimulus, while continuing to mitigate risks in the financial sector through careful monetary policy management.
"The more subdued economic environment has helped calm consumer price pressures, with the inflation forecast for 2013 revised down to 2.5 percent from 3.2 percent, and to 2.7 percent from 3.5 percent in 2014.
"For the rest of 2013, export and import growth rates are expected to remain in the single digit range, while the Renminbi will continue to appreciate, but at a more moderate pace than earlier in the year, ADB said.
First Published: Wednesday, October 2, 2013, 18:02