BEIJING, May 20 (Reuters) - The worst is over for the Chinese economy thanks to a massive stimulus plan and an increase in bank lending, but it remains unclear whether the recovery can be sustained, a government economist said on Wednesday.
Wang Yuanhong, a senior economist with the State Information Centre (SIC), said at a forum that economic growth was likely to edge up in coming quarters from a low base of 6.1 percent in the first quarter, allowing China to achieve its full-year growth target of 8 percent.
"But whether the current recovery is sustainable remains a question," Wang said.
One reason for the uncertainty is a lack of private investment, as non-state investors remain cautious about spending even though central and local government bodies are rolling out projects across the country.
"Whether the private sector will follow (the government) will depend on many factors, including confidence," he said. "We still can't say that investor confidence has recovered in China."
Wang's view echoed that of David Dollar, head of the World Bank's office in China, who told another forum that a revival in private investment was needed to justify current market enthusiasm about China's economic recovery. [ID:nPEK309462]
Wang said China faced inflation risks in the long term and would see positive consumer price index growth later this year, even though CPI for the year as a whole was likely to fall 0.5 percent.
China's consumer spending was strong in the first four months, but Wang said robust retail sales in rural areas were more a reflection of one-off factors such as subsidies from Beijing rather than a true improvement in rural purchasing power.
"If there are no follow-up policies, the current spending boom in rural areas will not last," Wang said.
Wang said China's $585 billion stimulus package was an "unconventional measure" that may result in waste and corruption, but it was a necessary move to avoid a slump in economic growth caused by weakening global demand. (Reporting by Zhou Xin and Jason Subler; Editing by Chris Lewis)