BOAO (China) – China is on track to achieve its 2022 growth target at 5.5%, according to government economists. This is despite a resurgence of COVID-19 cases, which has prompted private analyst to reduce their projections.

“The target is achievable despite the pandemic,” Zhang Yuyan, head of Institute of World Economics and Politics at the Chinese Academy of Social Sciences (CASS), a top government think tank, said at the annual Boao Forum for Asia.

Reporters at the forum in Hainan’s southern province heard him say that “there is still scope for cutting interest rates, reserve requirement ratios and (RRR) and there is also room for proactive fiscal policy.”

Zhang indicated that China’s inflation outlook remains positive, giving the central bank greater flexibility to adjust policy.

Xiong Aizhong is a second economist from the CASS. He also claimed that China has ample policy options to reach its target.

He said, “Compared to developed economies our policy space is relatively large as our inflation rate is relatively low and our debt burdens are relatively small.”

The International Monetary Fund, along with several other foreign banks, have downgraded their China growth projections as authorities struggle to contain the COVID-19 revival, which is mainly taking place in Shanghai’s financial center.

The IMF cut Tuesday’s forecast of China’s growth down to 4.4% from the 4.8% that it had in January.

DBS’s 2022 China growth prediction has been reduced to 4.8% by DBS, from 5.3%. Barclays LON has reduced its outlook to 4.3%, from 4.5%.

Nomura’s economists wrote in a note, “Beijing’s GDP target of about 5.5% this Year is becoming more difficult. We now see notable downside risk to our annual GDP forecast of 4.3%.”

China is easing more than most other major economies, which have been tightening monetary policies to fight inflation.

Zhang warned that the United States and China could have different policies, which may lead to capital flight.

Surprisingly, China’s central banking kept Tuesday its benchmark lending rates the same, despite having recently reduced the cash banks are required to keep as reserves.

China could encourage other countries to adopt the yuan as a currency in trade settlements or foreign currency reserves. The United States may also impose sanctions against Russia. Zhang stated that China needs to make the yuan more convertible and flexible.