China economy to grow 6.5 pct in 2016: central bank expert

A senior researcher at China’s central bank predicts the world’s second largest economy would grow 6.5 percent in 2016.

China’s National Development and Reform Commission said on Wednesday that China has set its official growth target for 2016 at between 6.5 percent and 7 percent.

The lower end of the range estimated by Lu Lei, head of research at the People’s Bank of China, took account of increasing deflationary pressures.

The official made the remarks in an editorial posted on Thursday on the China Finance 40 Forum website. The Forum is an academic organisation with membership drawn from current and former central bank officials.

Mr Lu also noted there was “limited room” for policy measures relating to monetary issues.

“Due to low investment returns in the real economy, interest rate and deposit reserve ratio cuts will encourage funds to flow to high-risk assets and fuel accumulation of financial risks,” he warned.

The researcher said he also believed the consumer price index would expand between 1.1 percent and 1.5 percent in 2016, while the producer price index – which measures prices at wholesale level – would fall 3 to 5 percent.