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European analysts project healthy growth of Chinese economy

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BRUSSELS, Dec. 9 (Xinhua) -- The current Chinese economic slowdown is only natural and, given the existence of strong growth factors, not worrying, said European analysts.

They also expressed confidence that the world's second largest economy will see steady and healthy growth in 2015, which will be based more on consumption and less on investment.

NO NEED TO SET A SPECIFIC GROWTH TARGET

Amid speculations that China will adjust its growth target further down to 7 percent or may even not set a mark at all, Daniel Gros, director of the Center for European Policy Studies, said there is no necessity to set a specific growth target.

"The Chinese government should refrain from giving a number for GDP growth next year, because the Chinese economy is in transition, when it is very difficult to predict growth," Gros told Xinhua.

"Moreover, the government itself has acknowledged that the quality of growth is now more important than the quantity. This is why the priority should now be targets in terms of the environment," he added.

China does not need a specific growth target the way it did in the past, said Fredrik Erixon, director of the European Center for International Political Economy.

"China should have advanced growth estimates, which of course is necessary for budgetary planning, but it should try to get away from the perception that the merits of economic policy stand or fall with hitting a precise target," Erixon told Xinhua in a recent interview.

With economic globalization, Erixon noted, it is necessary to be less strict about a growth target but more attentive to structural problems and economic imbalances.

A NATURAL AND STRUCTURAL SLOWDOWN

Looking back to the Chinese economy in 2014, the two European experts maintained that the Chinese economy is experiencing a natural and structural slowdown.

"The Chinese economy is experiencing a natural reduction in its growth rate since the low-hanging fruits in terms of bringing the excess rural population to the cities have been harvested already," said Gros.

"However, the situation is not worrying in the medium run since there are still strong growth factors," said Gros.

He noted that the quality of youth education is making more innovation and indigenous high-tech production possible. Moreover, infrastructure still needs to be improved in the western part of the country.

Yet he also stressed that there is still an excessive dependency on construction and real estate. "These sectors are important, but should not be kept alive through low interest rates," he said.

STEADY GROWTH FOR NEXT YEAR

On the outlook of the Chinese economy, Gros said China should see steady growth next year, hopefully based more on consumption and less on investment.

"The key point in the long term is to establish the supremacy of the rule of law. Another key point is to deal with the sale of land to developers: this is an endless source of temptation for corruption," he added.

Erixon said China's growth can still be healthy and, by international standards, strong. But the three mechanisms that have underlined growth in the past -- high investment levels, big monetary stimulus and export surplus -- will not deliver growth in the same way they did in the past.

He explained that China should get some tailwind from the recovering world economy and move up to a higher growth trajectory next year.

The fall in oil prices is also likely to give a boost to the growth of an energy-intensive economy like China, Erixon said.

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