China should ‘lower 2013 growth target’

SHANGHAI - Reuters

World Bank Group President Jim Yong Kim says China should reduce its growth rate target of 7.5 percent this year, but warns of tapering risk.

China should hit its GDP growth target of 7.5 percent this year, World Bank Group President Jim Yong Kim said today. 

But he warned that rising interest rates in emerging markets in response to reports that the U.S. is preparing to scale back its quantitative easing (QE) program show that significant risk remains.

“The rise in interest rates as a result of the announcement of the tapering of QE has exposed weaknesses in the economies of emerging markets,” he told reporters. “Our message is very strong to those emerging markets: think about those weaknesses and begin to move.”

Several investment banks upgraded near-term forecasts for China’s growth after a run of strong data for August, including factory output and exports, and many now have full-year growth above the government’s official target of 7.5 percent.

UBS, Deutsche Bank, CICC and Nomura were among the banks to upgrade their growth forecasts for 2013 after the recent data, and now all have it 7.6 percent or higher.

Kim was in Shanghai as part of a four-day tour focusing on expanding collaboration with China on climate change.

Power consumption in China, the world’s top energy user, is expected to grow more than 9 percent this year, faster than the 5.5-percent growth rate in 2012, the State Electricity Regulatory Commission said in January.

Much of that consumption is driven by inefficiently designed and poorly insulated buildings.