The International Monetary Fund (IMF) has raised its projection for China's economic growth this year and next.
In an update of the figures on Tuesday, the IMF forecast that China's economy will grow at a pace of 6.6 percent in 2017 and 6.2 percent in 2018, marginally higher than its anticipation in January.
The new projection came out just a day after China's National Bureau of Statistics said that the country’s GDP grew in the first quarter of 2017 by 6.9 percent, the highest level since the fall of 2015.
The IMF also reaffirmed its earlier forecasts of higher global growth this year and next, as the world’s economy has gained momentum since the middle of 2016.
The world economy will grow at a pace of 3.5 percent in 2017, up from 3.1 percent last year, and 3.6 percent in 2018, according to the projection.
The IMF’s January forecast for world output in 2017 was 3.4 percent. It said the good economic performance of China, as well as other European and Asian countries, has contributed to the rise.
Structural reforms
China has played an important role in world economic recovery. Infrastructure and real estate investment in China has supported a gradual global recovery in investment, the IMF noted.
The country's higher real estate investment and capacity reduction efforts have supported metal prices. Chinese government-led reductions in coal production have also helped rally and strengthen coal prices.
The IMF said other countries could follow China’s lead in structural reforms that can raise potential output as well as resilience to shocks.
Rebalancing economy
The Washington-headquartered organization highlighted that China's current account surplus is declining and GDP share of services is increasing, evidence of the country's continuing rebalancing process.
The IMF is pleased to see China’s efforts in rebalancing the economy, from being heavily geared towards investment to being more geared towards consumption, Christine Lagarde, Managing Director of IMF, said during a press briefing to open the IMF and World Bank's 2017 Annual Spring Meetings.
However, the IMF also pointed out risks of financial instability in the course of the country's economic growth, which has remained reliant on domestic credit growth. If financial instability occurred in China, it could spill over to other countries, it said.
