The International Monetary Fund yesterday raised its forecast for China’s 2017 economic growth to 6.7 percent, its third increase this year, citing “policy support, especially expansionary credit and public investment”.

In April, the IMF hiked its forecast for this year to 6.6 percent from January’s 6.5 percent, which was 0.3 percentage points above the previous projection.

China’s economy grew a faster-than-expected 6.9 percent in the first quarter of this year, well above the government’s target of around 6.5 percent for the full year.

The IMF said it now expects China’s growth to average 6.4 percent annually during 2018-2020. In April, the IMF said it expected 2018 growth to be 6.2 percent.

Along with a higher growth forecast, the IMF yesterday recommended China speed up reforms to transition its economy to more sustainable growth and adopt less accommodative monetary policy.

“The critically important recent focus on tackling financial sector risks should continue, even if it entails some financial tensions and slower growth,” IMF deputy managing director David Lipton said in Beijing.

China needs to ensure that “where credit is granted, it is backing economic activity that will be useful, that will be supportive of growth and will permit debts to be serviced without difficultly,” he said.

China should also resume progress toward a flexible exchange rate, Lipton said, while adding that the IMF assesses the yuan to be “broadly in line with fundamentals”.

The strengthening US economy, albeit with normalizing interest rates, is likely to be useful for the rest of the world, Lipton said.

The IMF official said President Xi Jinping’s speech at Davos in January was the start of China playing “a kind of leadership role at a time when there is a dialog going on around the world about the path of globalization.”