Recently several international organizations released the global economic outlook, in which they delivered an optimistic attitude about China’s economic growth. The International Monetary Fund (IMF) revises up its projection of China's growth and now expects 6.5 percent growth for China's economy in 2017, up 0.3 percentage point. The United Nations maintains its 6.5 percent projection for China’s economy in 2017; the World Bank downgrades its projection of the world economic growth by 0.1 percentage point and maintain the 6.5 percent growth projection for  China’s economy unchanged. Moreover, JP Morgan, HSBC, Citibank and some other foreign institutions also released reports and predicted China’s economy to further stabilize in 2017.

 

I. IMF: upgrading its projection of China’s economic growth to 6.5 percent. It released the World Economic Outlook on January 16 and declared to maintain its projection of the world economic growth in 2017 and 2018 at 3.4 percent and 3.6 percent, respectively, and revise up its projection of China’s economic growth in 2016 from 6.6 percent to 6.7 percent, the highest of all major economies of the world, upgrade the growth rate in 2017 by 0.3 percent point to 6.5 percent, and keep the 2018 projection unchanged at 6 percent. IMF said the recent economic growth outlook of China was revised up by implementation of the financial incentives, and China will be the key to accelerate the world economic recovery. However, the possibility of economic slowdown caused by China’s excessive reliance on incentive policies and rapid expansion of debts is also a major risk the world economy is facing.

 

II. The World Bank: it predicts that China’s economic growth to be 6.5 percent, 6.3 percent and 6.3 percent in 2017, 2018 and 2019, respectively. The World Bank released the Global Economic Prospects on January 10 and declared it predicted the global economic growth will recover slightly to 2.7 percent in 2017, the economic growth of emerging markets and developing economies will reach 5.6 percent and the developed economies rise slightly to 1.8 percent. China’s economic growth can remain stable. Although it is facing the pressures of slowing external demand and overcapacity of some sectors, the macroeconomic policy expectation will support the major domestic growth drivers, for example the continuously growing infrastructure investment will offset the impacts of sliding private investment, and the service sector will surpass the industry to become the new growth powerhouse. Meanwhile, the financial market will remain stable since February 2016. The World Bank maintains its projection of China’s economic growth to 6.5 percent in 2017 unchanged and 6.3 percent in 2018 and 2019.

 

III. The United Nations: In this year and the next year, China’s economy will stay stable and keep the 6.5 percent growth annually. The United Nations Department of Economic and Social Affairs released the 2017 World Economic Situation and Prospects on January 17 and declared the world economy is still facing low growth, shrinking trade and other problems. It is predicted that the world economic growth will reach 2.2 percent, 2.7 percent, and 2.9 percent from 2016 to 2018, respectively. It downgrades 0.7 and 0.5 percentage point respectively for the economic growth in 2016 and 2017, compared with the projection in January 2016. China’s economy is expected to remain stable, mainly benefited from the domestic demand and slack fiscal policy. In addition, investment in the research and development, education and infrastructure and other key fields will also facilitate the social and environmental progresses while helping improve the productivity. It is predicted that China’s economic growth will reach 6.6 percent, 6.5 percent and 6.5 percent from 2016 to 2018. The projection for 2016 is upgraded by 0.2 percentage point compared with the projection last time and the projection for 2016 remains unchanged.

 

IV. JP Morgan: It predicts China’s economic growth to reach 6.5 percent in 2017. JP Morgan’s chief economist Zhu Haibin said on January 13 that China’s economic growth is predicted to reach 6.7 percent in 2016, and 6.5 percent in 2017. Entering 2017, the two pillar industries real estate and the automobile sales that held up the economic recovery last year will slow down this year, but the financial service industry that suffered from sharp decline in 2016 is expected to return to the normal track to 8-9 percent. Meanwhile the infrastructure construction and other sectors will benefit from the policy support continuously to boost the economic growth. At present, of the “troika” that drives China’s economic growth, consumption has replaced investment to be the No.1 driver. Consumption and service sector make growing contribution to China’s economic growth. This is a positive element. Moreover, with the ending of PPI deflation, the sharp decline trend of the manufacturing and private investment sectors of China will come to a stop in 2017.

 

V. HSBC: In 2017 China’s economic growth is expected to remain 6.5 percent. Qu Hongbin, chief economist of HSBC Greater China said on January 17 that China’s economy, despite of the pressures from the real estate market adjustment, lower private investment and capital outflow, is expected to remain stable and make progresses with policy support. By promoting practical measures on breaking monopoly, closing down “zombie enterprises” and streamlining administration and delegating power to the lower level, stabilizing enterprises’ confidence, reversing the decline trend of private investment, China can offset the export pressure and reduce capital outflow and the policy goal of maintaining yuan stability can be achieved. As for the tax and expenditures reduction and short slab makeup, China should give priority to maintaining stable growth of the infrastructure investment, and increasing investment in the underground pipeline network, metro, water and air pollution control. China’s consumption is actually good and is expected to keep a stable growth level. In this way, it is hopeful for China to maintain about 6.5 percent growth.

 

VI. Citibank: It predicts that China’s GDP in 2017 will grow at 6.5 percent. Liu Ligang, chief economist of Citibank China said on January 11 that the policy framework in 2016 is hopefully inherited and reinforced in 2017, and based on the adequate fiscal space, the deficit of the central government can enlarge to 3.5 percent, and the local governments will issue about RMB6 trillion bonds again; it is predicted the central bank will lower the reserve ratio for two times and 50 base points each time. The stability protection policy will help reduce the economic uncertainty. The Citibank thus upgrades its projection of China’s economic growth rate to 6.5 percent in 2017. Moreover, the state-owned enterprises (SOE) have slowed down overseas investment, and in combination with crackdown on the illegal private banks, the capital outflow scale will be reduced this year. It is predicted that the exchange rate of the RMB against the US dollar will remain at 7.15 at the end of 2017 and 6.8 in the middle and long run. The 19^th National Congress of the CPC will be convened in 2017, which will usher in the next five-year policy period and the SOE reform will be further intensified.

 

VII. Standard Chartered Bank (SCB): in 2017 China’s economy is expected to maintain the 6.5 percent growth and China will continuously serve as the “stabilizer” of Asian countries and developing countries. SCB China Asset Management Unit released the Global Market Outlook 2017 on January 16, and said although China’s housing sales growth rate will decline periodically, the growth rate will decline in the future year only in consideration of the declined inventory and tight supply of land; what’s more, China has made commendable efforts in scientific and technological innovation and institutional reform and consumption has played a pivotal role in driving the economic growth. Therefore China is hopeful to maintain about 6.5 percent growth in 2017, continuously serve as the “stabilizer” of Asian countries and developing countries and support the global trade and commodity price. Moreover, the new economy benefited from the structural transformation is the most hopeful in the Chinese market, and tourism, film and TV entertainment, sports, science and technology, electronics, health, education and other sectors that cater to the new consumption trend are worth continuous attention.

 

Source: Translated from Invest Guangzhou, January 22, 2017