EU lowers estimates on China's growth

China is expected to grow at 7.5 percent in 2013, and slow down to 7.4 percent in 2014 and 2015, the European Union's European Commission said in a report on Tuesday.

According to the EU, the major risks for the Chinese economy remain domestic although China remains exposed to global currents.

"Rapid credit growth over recent years, while real activity has been on a declining trend, suggests a growth of stress in the financial system," the report explained.

It said that the country is gradually shifting to "a lower trend growth path", because of the fading of technological catch-up, falling returns on marginal investment and the onset of a decline in the overall labor force.

The report pointed weakened consumption and net export would slow the growth, even though they were partly offset by a rebound in investment activity earlier this year, the reduction in the two sectors still will push overall growth rate down to 7.5 percent this year.

This estimation almost got echoed by the International Monetary Fund, which announced a report in October that the country's GDP growth will be 7.6 percent this year and 7.3 next.

IMF has lowered estimates on the Chinese economy, while the fund also cautioned about the country' rising debt levels and a surge in credit.

The commission has warned about the risk of China's slowdown: "while a sharp downturn in China appears unlikely in the short term, it remains a concern over the forecast horizon".

It also said it may have negative impacts on the EU's economy. It said that China is a very important trade partner for most member states of the EU, and it is expected to experience "only a relatively small slowdown resulting in a limited negative impact on (the EU) member states'GDP".

Exports to China, Russia and Turkey represent 20 percent of the total for the EU and are equivalent to 2.3 percent of its GDP.

The report said the improving prospects in Singapore, the United Arab Emirates and Turkey are expected to have a positive impact on the EU.