In a statement issued on Wednesday, the International Monetary Fund (IMF) said that China’s real gross domestic product (GDP) is projected to average around 9 percent in 2004 and slow to about 7.5 percent in 2005.

In April, the IMF estimated that GDP growth would be 8.5 percent this year and 8 percent next year.

“Executive Directors commended the Chinese authorities for their skillful economic management, which has reduced the risk of overheating and further strengthened the Chinese economy,” the IMF said in a statement nearly a month after its Executive Board concluded an annual review of China’s economy.

The statement said, “Efforts to rein in credit and slow investment appear to have started to bear fruit, as evidenced by the recent signs of moderating economic expansion.”

The IMF indicated that the main challenge ahead is to harness the strong potential for sustained economic expansion while maintaining macro-economic equilibrium and achieving sound, broadly based economic development.

It said that the Chinese authorities must speed up reforms in key areas including banks, state-owned enterprises and labor markets to achieve a controlled deceleration.

“A crucial short-term concern is that despite the recent indications of moderation in the fast pace of investment and economic growth, a soft landing of the economy is not yet assured,” it added.

A soft landing implies a slowdown in booming economic growth that avoids degenerating into a slump.

(Xinhua News Agency August 26, 2004)