IMF revises Chinese 2017 GDP forecasts higher again

The International Monetary Fund marked up its forecasts for Chinese economic growth in 2017 for a second time this year and said the yuan was in-line roughly at the right value.

On the back of its annual Article IV review with senior government officials, the central bank and private sector representatives and academics, the IMF forecast Chinese GDP would expand at a roughly 6.7% pace in 2017 and by 6.4% a year between 2018 and 2020.

That was better than the 6.5% clip projected in January, and the forecast for growth of 6.6% forecast in the April edition of its World Economic Outlook.

Nonetheless, at the end of his visit IMF first deputy managing director David Lipton said: "While some near-term risks have receded, reform progress needs to accelerate to secure medium-term stability and address the risk that the current trajectory of the economy could eventually lead to a sharp adjustment."

"It is critical to start now while growth is strong and buffers sufficient to ease the transition."

On the other hand, Lipton said auhorities in Beijing were "fully aware" of the risks and had already begun to adopt critical measures, including regulatory actions against financial sector risks.

The country's corporate debt pile was now also growing more slowly and measures had been put in place to cut overcapacity.

To take note of, the IMF said the country's currency was "broadly in-line with fundamentals" even though China's external position was "moderately stronger" than justified by its medium-term fundamentals.

Among some of the measures suggested by the Washington-based lender were further boosting public spending in order to bring personal saving rates lower.

Lipton also said it was "critical" that efforts to tackle financial sector risks continue.

More focus should also be placed on the quality and sustainability of economic growth, instead of on quantitative targets, he said.

Carefully sequenced capital account liberalisation should proceed, Lipton added.