Central bank economists cut year's growth forecast to 7pc

Economists at the People's Bank of China cut the forecast growth for the year in the world's second-largest economy to 7.0 per cent, while they also sharply lowered the annual trade outlook and anticipated softer inflation.

The latest forecast for gross domestic product, compared with 7.1 per cent predicted six months ago, would just hit China's annual official target, according to a working paper written by a group of analysts headed by Ma Jun, the chief economist at the research bureau of the central bank.

However, they said growth might "slightly pick up" in the second half from the first six months "thanks to the lagging effects of growth-supporting policies, stabilisation in the real estate market, and recovery in the world economy".

Despite measures taken by Beijing, including cutting taxes and interest rates, China's cooling growth has hit more businesses.

Moody's Investors Service said more corporate defaults might happen on the mainland, while 39 per cent of companies polled by the European Union Chamber of Commerce in China had a plan to cut costs.

Exports growth might decelerate to only 2.5 per cent this year after growing 6.1 per cent in 2014, the central bank economists said, adding that their forecasts were personal rather than official. They had earlier forecast 6.9 per cent export growth for this year.