China needs to accelerate structural reforms to boost productivity and sustain growth momentum, says an Asian Development Bank (ADB) report released here Thursday.
In its Asian Development Outlook 2017, ADB projects gross domestic product (GDP) growth for China moderating to 6.5 percent in 2017 and 6.2 percent in 2018, from 6.7 percent last year.
China's efforts to transform the country to a more consumption and service-driven economy is well under way, said Yasuyuki Sawada, ADB's chief economist.
Although its growth outlook will slow relative to the recent past, strong consumer spending, fiscal support for infrastructure, and structural reforms to improve productivity in industry will keep China's economy on solid ground, he said.
Consumption will continue to drive growth in 2017, backed by sustained wage growth and increased government spending on health, education, and pensions. Industrial growth will decelerate in 2017 due to reduced investment with excess capacity, slowing real estate investment, and high debt, although consumer-oriented manufacturing will continue to have a positive outlook, according to the report.
Inflation is expected to accelerate to 2.4 percent in 2017 and 2.8 percent in 2018, due to stronger consumer demand, higher wages, continued price deregulation, a weaker renminbi, and the increase in global commodity prices, it said.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it has 67 members, including 48 from the region.