A senior Morgan Stanley economist has predicted China will deliver its annual growth goal this year despite sluggish global economic recovery.
"Tracking growth rates so far, we are confident that the economy will be able to achieve 6.5-percent GDP growth for 2016," Morgan Stanley's chief Asia economist Chetan Ahya said on the sidelines of the investment bank's China Summit in Beijing.
The economy expanded 6.7 percent year on year in the first quarter, better than market expectations and in line with an official target range between 6.5 percent and 7 percent.
Weighed on by lackluster exports and investment, the world's second-largest economy is facing a prolonged slowdown. But Ahya is not concerned.
"It is perfectly normal. You cannot expect an economy of nearly 11 trillion U.S. dollars of GDP to have the same rate as when it was only two trillion U.S. dollars," he said. "Some moderation is healthy and inevitable."
China is overhauling its economy: transitioning to a more sophisticated growth model, weaning itself off reliance on investment, upgrading manufacturing and climbing up the industrial value chain.
Consumption has become the biggest contributor to economic increase, and service and high-tech sectors are booming.
"The country can no longer be viewed from one single lens of just problems in the manufacturing sector or the old economy," Ahya said.
However, he warned China still faces some of the same problems as other Asian economies, including high debt levels, a slowing working population increase and deflationary risk.
Ahya said tackling deflation is particularly important as it could push up borrowing costs, hinder private investment and lead to rising debt.
He also expects the Chinese currency renminbi, or the yuan, to further depreciate by around 4 percent to 4.5 percent against the U.S. dollar, provided the U.S. Federal Reserve hikes interest rates and China keeps its easing policy.
Also Morgan Stanley's co-head of global economics, Ahya forecast the global economy will continue to be pressured partly due to uncertainties over Britain's EU exit, the Fed's interest rate hike and adjustments in emerging economies.
The investment bank has gathered 1,900 elite businessmen and women, investors and researchers for its second China Summit, running from Tuesday to Thursday.
