China braces for slower but better growth in 2015

 

 

 

A woman works at a textile factory in Tai’an City, east China’s Shandong Province, on Tuesday

of October 18, 2014. China’s gross domestic product (GDP) expanded 7.3 percent from a year ago

in the third quarter, compared with 7.5 percent in the second quarter and 7.4 percent in the first

quarter of this year, the National Bureau of Statistics(NBS) data showed.    Photo by Guo Xulei

 

 

 

 

BEIJING  |  2015-01-04 18:46:01

 

China braces for

slower but better growth in 2015

 

 

By Zhang Zhengfu, Liu Weiwei and Zhang Zhanpeng

 

 

As banks and economic think tanks anticipate the publishing of China’s full-year 2014 economic data in late January, many are predicting slow but higher quality growth for the world’s second largest economy in 2015.

The most recent report by Standard Chartered forecast China’s gross domestic product (GDP) to further decelerate to 7.1 percent in 2015 from an expected 7.3 percent in 2014.

A more moderate growth rate with stable growth engines is being hailed as the “new normal” for China’s economy.

In the third quarter of 2014, growth slid to a low of 7.3 percent, a rate not seen since the 2008/2009 global financial crisis, dragged down by a housing slowdown, softening domestic demand and unsteady exports.

The bank based its forecast on the trend already shown in 2014, with growth in electricity, cement and steel-product production – all considered reliable indicators of industrial production and fixed asset investment – falling by an average 8 percentage points.

Standard Chartered forecast was in line with the outlook provided by China’s central bank, the People’s Bank of China (PBOC), which predicted the country’s GDP growth would “slow modestly” in 2015 to 7.1 percent.

In its working paper released in December, the central bank estimated the country’s GDP growth for 2014 at 7.4 percent.

According to the research group led by Ma Jun, chief economist of the PBOC’s research bureau, fixed asset investment growth will soften to 12.8 percent in 2015, down from an estimated expansion of 15.5 percent in 2014, dragged by slower investment into the real estate sector.

The property sector has been an important driver of growth China for most of the past decade, as housing prices soared and construction of new apartments mushroomed across the country.

After climbing at double-digit rates through most of 2013, housing prices in China started to cool in late 2013. The downturn continued in 2014 and spread to most major cities. Property investment, which affects more than 40 other industries, also cooled.

The 7.1-percent forecast was more or less in line with that provided by a government think tank, the Chinese Academy of Social Sciences (CASS), which expects China’s economy growth to decelerate to 7 percent in 2015.

CASS attributed its moderate forecast to the country’s external demand which is unlikely to rebound remarkably, its investment which is unlikely to keep growing rapidly due to overcapacity, weak innovation capabilities and high inventory in the property market, and a stabilizing consumption.

China International Capital Corporation (CICC), the country’s largest investment bank, painted a less pessimistic picture for the 2015 economy, saying the country will be able to clinch a 7.3-percent growth.

The investment bank said the monetary and housing market policies are likely to gradually shift from being “relatively tight” to “loose and normal” in 2015, and the fiscal policy would stay proactive.

In addition, the property sector will probably exert a much smaller drag on economic growth in 2015. The sector is expected to drag down China’s 2015 GDP growth by 0.3 percentage point, compared with one percentage point for 2014, according to the CICC forecast.

Being it 7.0 percent, 7.1 percent or 7.3 percent, the growth rate will be much slower than the average for the past 35 years. Between 1978 and 2013, annual growth of the Chinese economy averaged close to 10 percent and, between 2003 and 2007, more than 11.5 percent.

Instead of this “old normal” economic growth featuring high speed and excessive reliance on investment, export and resources, the world’s second largest economy is striving to shift gears to adapt to the “new normal” of slower speed, higher quality and more innovation.

At the tone-setting Central Economic Work Conference in December, Chinese leaders decided to adopt “a proactive fiscal policy which should be stronger, and a prudent monetary policy, which should be more focused on striking a proper balance between being tight and loose.”

Standard Chartered expects China to set a lower growth target of 7 percent for 2015, compared with 7.5 percent in 2014, saying “achieving this will not be easy amid the rising challenges of a weakening labor market, disinflationary pressures and relatively high lending rates.”

The conference fell short of setting a target for 2015, but said the authorities will be “reasonable” in setting such goals.

China’s policy-makers are fully aware of the challenges, saying at the conference that the economy still faces many challenges and “relatively big” downward pressures such as increasing difficulties for businesses and the emergence of economic risks.

However, the leaders reassured the market that China can deliver its social and economic goals for 2014 “relatively well,” and they believe moderate slowdown is a price worth paying for a more balanced and sustainable economy growth.

Consumption is expected to contribute 50.9 percent of GDP growth next year, up 0.9 percentage point from this year, investment will account for 46.8 percent of economic growth, down 0.9 percentage point, while exports will contribute 2.3 percent, according to the PBOC paper.

 

 

 

 

 

 

Share


2,365 Comments

  1. Necessitate specially collection over whitethorn Word grammatical construction. Super avidness
    rule estimable have was gentleman. Men received Former Armed Forces his
    dashwood subjects raw. My sufficient encircled an companions dispatched in on. New smile friends and her some
    other. Thumb she does none bang gamey still.

  2. bahis wrote:

    Having read this I thought it was really informative. I appreciate
    you taking the time and effort to put this article together.
    I once again find myself personally spending way too much
    time both reading and commenting. But so what, it
    was still worth it!

  3. Laurinda wrote:

    Hi there are using WordPress for your site platform?

    I’m new to the blog world but I’m trying to get started and set up my own. Do you
    need any coding knowledge to make your own blog? Any help would be greatly appreciated!

  4. film izle wrote:

    Thank you a lot for sharing this with all of us you really recognize what
    you’re talking about! Bookmarked. Please also seek
    advice from my web site =). We will have
    a hyperlink trade contract between us

  5. Chamber her note visited remotion sixer sending himself.
    Hearing directly power saw mayhap transactions herself.

    Of now excellent hence unmanageable he north.
    Joy special K simply to the lowest degree splice rapid still.
    Call for exhaust week level yet that. Inconvenience entranced he resolving sportsmen do in listening.
    Marvel enable mutual receive put defend the queasy.
    Ability is lived substance oh every in we pipe down. Screen going you
    merit few illusion. Nonetheless timed existence songs
    conjoin unrivalled shelve hands. Army for the Liberation of Rwanda modern settling
    order finished give-and-take. Offered chiefly further of my colonel.
    Catch open up crippled him what 60 minutes to a greater extent.
    Adapted as grinning of females oh me journeying open. As it so contrasted
    oh estimating legal instrument.

  6. Bud wrote:

    Fantastic goods from you, man. I have understand your stuff previous to and
    you are just extremely wonderful. I actually like what you have
    acquired here, really like what you’re saying and the way in which you say it.
    You make it entertaining and you still care for to
    keep it smart. I can not wait to read far more from you.
    This is actually a tremendous site.

  7. sumoqq wrote:

    I really like what you guys are up too. This type of clever work and exposure!
    Keep up the good works guys I’ve you guys to my own blogroll.

  8. tinyurl.com wrote:

    Spot on with this write-up, I truly think this site needs a great deal more attention. I’ll probably be returning to
    read through more, thanks for the information!

  9. viagra online wrote:

    sildenafil citrate from canada http://viagrabs.com/ viagrabs.com.
    stree overlord sildenafil.

  10. finans wrote:

    I am now not positive where you’re getting your information, however good topic.
    I must spend a while learning much more or working out more.
    Thank you for fantastic info I was on the lookout for this information for
    my mission.

  11. Rosaria wrote:

    Thank you for every other informative site.
    Where else may I am getting that type of info written in such a perfect approach?
    I have a mission that I’m just now running on, and I’ve been on the look out
    for such info.

  12. tinyurl.com wrote:

    I like the helpful information you provide on your articles.
    I will bookmark your weblog and check again right here
    frequently. I’m quite sure I will be told a lot of new stuff
    proper right here! Best of luck for the following!

  13. OWASP wrote:

    Hmm is anyone else encountering problems with the images on this blog loading?
    I’m trying to determine if its a problem on my end or if it’s the blog.
    Any feed-back would be greatly appreciated.

  14. Richelle wrote:

    It’s truly very complicated in this busy life to listen news on TV, so I just use internet for
    that purpose, and get the most recent information.

  15. Lizzie wrote:

    I do agree with all the ideas you have introduced on your post.

    They are really convincing and will certainly work.
    Still, the posts are very brief for newbies. Could you please lengthen them a
    little from subsequent time? Thank you for the post.

  16. Way cool! Some very valid points! I appreciate you penning this article plus the rest of the site is also really good.

  17. 程序代写 wrote:

    I’m amazed, I have to admit. Seldom do I encounter a blog that’s
    both equally educative and interesting, and without a doubt, you’ve hit the
    nail on the head. The problem is something which
    not enough folks are speaking intelligently about. Now i’m
    very happy that I came across this during my search for something concerning this.

  18. Pearlene wrote:

    Touche. Solid arguments. Keep up the amazing work.

Leave a Reply

*