The Fitch global ratings agency said measures taken by China to bring down borrowing levels will inevitably dent business investment and take annual GDP growth down to about 4.5 percent, well below the official target of 6.5 percent.
Credit growth and infrastructure investment have started to fall sharply, “cracks have appeared” in the real economy and a rise in defaults has tested the nerves of investors, said Larry Hu, head of China economics at Macquarie Securities in Hong Kong.
Outstanding off-balance sheet lending plunged by 100 billion yuan in the first four months of 2018, having grown by 2.2 trillion yuan in the same period last year.
China’s economic expansion is likely to slow to 6.6 percent this year and to about 5.5 percent by 2023, the International Monetary Fund (IMF) said in a statement issued last week in Beijing.
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