Asia Economy

Can China protect its prized 7% growth level?

With China's economy showing fresh signs of weakness in February, questions are rising over whether the country will be able to protect its prized 7-plus percent growth rate.

"In days of yore when the official growth forecast was 8 percent, people talked about the need to 'protect 8'. We think China can 'protect 7'," said Tim Condon, chief economist, Asia at ING.

"With 12 straight quarters of 7-8 percent growth, there's enough momentum in the economy. Also the government has enough policy flexibility to implement reforms at a pace that doesn't impinge on growth too much," he said.

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A continued slowdown in country's key manufacturing sector this month has triggered renewed concerns over the outlook for the world's second largest economy this week.

The HSBC flash China manufacturing Purchasing Managers Index (PMI) published on Thursday fell to 48.3 from a final reading of 49.5 in January, slipping further below the key 50 threshold that demarcates expansion from contraction.

(Read more: China factoryactivity shrinks for a second month)

While he has downgraded his first quarter gross domestic product (GDP) forecast to 7.5 percent from 7.6 percent on the back of the data, Condon said he sees no risk of growth falling below the key 7 percent level this year.

Ting Lu, chief China economist at Bank of America Merrill Lynch said while the visibility of short-term growth momentum is quite low at the moment, he is not overly concerned about the growth outlook either.

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Should you be worried about China's latest PMI?
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Should you be worried about China's latest PMI?

"Macro numbers from national statistics agencies so far painted a mixed picture, with trade growth and credit expansion above market estimates and the Chinese New Year holiday Golden Week sales in line with expectations," he said.

"The national crackdown on some vices started in mid-February could dent consumption, but the impact could be hard to estimate," he added. The Chinese Ministry of Public Security on Sunday ordered police across China to ramp up efforts to tackle the "three vices" - prostitution, gambling and drug trafficking - warning officials they would be held accountable for illegal activities.

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In addition, he says it's becoming increasingly clear that Beijing will set its annual growth target – which it typically exceeds each year – at 7.5 percent again for 2014. China is expected to announce its economic targets on March 5 when its annual parliamentary meeting is held in Beijing.

Earlier this week, China's Ministry of Information and Industry set the annual target for industrial output (IP) growth – which is highly correlated with GDP growth – at 9.5 percent, Lu explained.

"Last year IP growth was 9.7 percent, while GDP growth was 7.7 percent. The 7.5 percent GDP growth target for 2014 is now well expected by the market," he said.

—By CNBC's Ansuya Harjani. Follow her on Twitter: @Ansuya_H