China central bank reiterates economic forecasts

China’s central bank reiterated its forecast for economic growth of 6.8% this year on Wednesday but cut its estimate on exports.

In its mid-year work report, the People's Bank of China slashed its forecast for exports to a 1% drop from a previous expectation for 3.1% growth.

China’s trade shrank 8% last year, compared with the government's target for 6%, the worst performance since the global financial crisis.

However, the central bank sees domestic recovery remaining on track.

The PBoC upgraded its forecast for fixed-asset investment growth to 11%, up 0.2 percentage points from estimates made late last year.

It also expects consumer price inflation to rise 2.4% this year, 0.7 percentage points higher than its earlier forecast.

Meanwhile, the PBOC warned the government's goal to reduce debt levels and overcapacity could lift bond default risks and make it trickier for companies to raise funds.

The central bank added that the pace of US interest rate rises would affect global capital flows and emerging market currencies. The Federal Reserve meets next week to decide on interest rates but is expected to keep policy unchanged following a dovish speech by chair Janet Yellen on Monday and a weak non-farm payrolls report on Friday.

"Since the beginning of this year, the global and domestic economic environment has experienced a number of changes," the PBOC said in the report.

"Reflecting these recent developments, we revised our China macroeconomic forecasts for 2016. Compared with our published forecasts in December last year, we maintain our baseline projection of 2016 real GDP growth at 6.8%."

The report was released just after data showed China's global trade surplus widened to $49.98bn in May from April's $45.6bn, missing estimates of $55.70bn.

Exports fell 4.1%, compared to analysts’ forecast for a 4% drop and the previous month’s 1.8% slide. Imports dipped 0.4% in May but it was an improvement on April’s 10.9% plunge and better than expectations for a 6.8% decrease.

US officials have been in China this week urging the nation the reduce trade barriers for foreign businesses. They also raised worries that Chinese companies are dumping underpriced goods, such as steel, in offshore markets.