The Chinese economy is set to expand 7 percent this year as it shifts to slower and more sustainable growth after three decades of robust economic development, the Organisation for Economic Co-operation and Development said in a report released Friday.
The Paris-based think tank forecast 6.9 precent growth for China in 2016 and said that further reforms are needed to ensure that future growth is resilient, inclusive and green. In 2014, the economy grew 7.4 percent, roughly in line with the official target of 7.5 percent.
"Following one of the most tremendous economic expansions in world history, China's gradual transition towards a 'new normal' of slower, more sustainable growth is to be welcomed," OECD Secretary-General Angel Gurria said.
"China knows how to grow at a blistering pace. The challenge now is to ensure that future growth occurs on a more durable and inclusive footing."
According to the OECD, the ongoing transition is multifaceted and calls for unwavering commitment to structural reforms. "In the near term, China must maintain sufficient momentum to reduce economic imbalances while avoiding overly abrupt adjustments that might trigger a crisis," the report said.
The Chinese service sector will benefit from opening up to private investment and greater innovation activity will crucial to transform the economy from middle-income to higher-income status, the OECD said. The group also suggested reduced state-ownership in commercially-oriented service enterprises.
The OECD recommended continued gradual liberalisation of deposit interest rates, enhancement of financial stability, fiscal transparency and sustainability. The report also urged sustained pursuing of stated emission targets.
The group also urged China to boost public spending on education and nurture right skills to meet the demand of a knowledge-based economy. The report also pointed out scope for improvements in rural finance.
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