Growth to hit 6.7% due to woes in manufacturing, export

An employee welds the exterior of a vehicle along a production line at a factory in Qingdao, Shandong province. [Photo/Agencies]

China's economic growth is predicted to further decelerate this year to 6.7 percent, the slowest since 1991, trapped by manufacturing overcapacity and sluggish export, said a think tank report on Tuesday.

The year-on-year GDP growth in 2015 is possible to achieve 6.9 percent, down from 7.4 percent in 2014, predicted by the same report from the Center for Forecasting Science, Chinese Academy of Sciences (CAS).

It is less likely for the three major driving forces of economic growth – consumption, investment and export, to bottom out over the year affected by the economic downward pressure, said the report.

It indicated the strongest support of the world's second largest economy will be domestic consumption in the coming months, which will contribute 4 percentage points, compared with 2.6 percentage points from investment and 0.1 percentage points from export.

Stimulus on these driving forces, or the "demand side" will be less efficient to stabilize the growth because of the serious overcapacity problem, thus the government policy will focus on structuring reforms on the "supply side", said Chen Xikang, a professor of Academy of Mathematics and Systems Science under the CAS.

The report forecasted a 10.5 percent year-on-year growth of retail sales this year, down from a possible 10.7 percent growth in 2015. The fixed-asset investment will remain stable around 10 percent. The export, meanwhile, is likely to rebound to a 3.9 percent growth from a drop of 1.8 percent.

The forecast was published two weeks before the National Bureau Statistics' release of the 2015 GDP growth rate and other major economic indicators.