China’s economic growth to slow to 6.5%
BEIJING: China’s economic growth will slow to 6.5 percent next year and the yuan will continue falling against the dollar, a top Chinese think-tank said Monday.
The prediction follows a raft of positive data earlier this month that raised hopes of an end to the slowdown.
But the economy — the world’s second largest — still “faces increasing downward pressure,” the Chinese Academy of Social Sciences (CASS) warned, according to a transcript on the official china.org.cn website.
It also predicted that the yuan, currently hovering around eightyear lows — would lose another three to five percent against the dollar.
The government- linked thinktank made the forecasts at an annual press conference, three days after Chinese leaders wrapped up a key economic meeting known as the Central Economics Work Conference.
At the conclave, attended by President Xi Jinping, leaders vowed to fix the problems ailing the partially-planned economy, taking aim at sclerotic state-owned enterprises and property speculation that has raised fears of a massive bubble about to burst.
Last year CASS predicted the economy would grow at a rate of 6.7 percent.
So far, that prediction has been spot on: the economy expanded 6.7 percent for three consecutive quarters this year, the slowest pace since the global financial crisis.
This year’s prediction of 6.5 percent plumbs the lower depths of the national goal of between 6.5-7.0 percent.
It would be the lowest annual figure since 1990 when it clocked in at 3.9 percent.
The country’s five-year plan for economic and social development pledged average growth of at least 6.5 percent a year over the 20162020 period — implying that at times it could be lower.
Several factors have helped China’s economy stay on target, CASS said, including stabilization of consumer spending growth, a pickup in real estate investment growth, and robust infrastructure spending.
Imports and exports are forecast by CASS to decline by 9.5 and 7.2 percent respectively in the current year compared to 2015.
Imports for November beat expectations, moving from negative to positive territory and raising hopes that dwindling growth had stabilized.
China is seeking to make a difficult transition from dependence on exports and heavy industry toward consumption as the key driver of the economy, but the process is proving bumpy.
Consumer spending is expected to slow from 10.0 percent in 2016 to 9.5 percent in 2017, CASS said.
The country already faces a number of challenges, ranging from underperforming and overproducing steelmakers to massive capital outflows as investors seek better and more stable investments abroad.
But next year it will also face an uncertain economic environment, with the next US president Donald Trump threatening to slap the country with massive tariffs and brand it a “currency manipulator” despite evidence that it is struggling to prop up the yuan.