SHANGHAI (Reuters) – China’s economic growth is likely to slow to 6.9 percent this year amid gloomy short-term macroeconomic trends and the threat of deflation, state media quoted an annual report from a think tank as saying. of the government.
The Chinese Academy of Social Sciences (CASS) said in its “Blue Book” report on China’s economy that the slowdown was caused by the fall in investment by companies and individuals, and the increasing debt pressure faced by local governments, the Shanghai Securities News reported.
The National Bureau of Statistics earlier this month revised China’s economic growth in 2014 to 7.3 percent, down from a previous reading of 7.4 percent which was its slowest rate in 24 years . The economy grew 7 percent in the second quarter.
Beijing just said it is targeting this year’s growth of around 7 percent. CASS’s status as a leading state-supported center for academic and policy research means that its outlook reflects to some extent the thinking of central government.
The report, published on Monday, said the economy was closely linked to a demographic window – defined as a period when a country’s working-age population reaches its peak – which opened in China in the previous years.
It is estimated that the country’s labor force would contract 0.4 percent over 2016-2020, after having grown 0.61 percent over 2008-2015 and 1.58 percent over 1985-2007.
CASS also said that the development and transformation of the country’s financial markets needed more time.
The report urged curbing overspending, “lazy” regional governments, diversifying sources of tax revenue, implementing tax cuts if local governments take too long to spend their budgets, and reforming the fiscal expenditure structure.
Reporting by Brenda Goh; Additional reports from SHANGHAI Newsroom; Editing by Kazunori Takada and Jacqueline Wong