China Economic Panel (CEP) by ZEW and Fudan University (Shanghai): Economic Expectations for China Decrease Again

Business cycle expectations for China have resumed their downward trend according to the current results of the China Economic Panel (CEP). After a transient four-week increase, the CEP Indicator reaches a value of 4.7 points in the current survey period (May 14 to June 2, 2014), which is close to a six-point decrease. The CEP Indicator captures the expectations of financial market experts regarding the economic development in China over the course of the next twelve months. The indicator is part of the CEP, a monthly survey by the Centre for European Economic Research (ZEW) and Fudan University among experts on China from financial, research and economic departments of banks, insurances, investment companies and industry.

Residential real estate markets in main Chinese metropolis continue to curb growth prospects for the economy. In six of seven cities covered by the survey, experts expect apartment and house prices to decline within the upcoming twelve months. Economic expectations for the construction industry, which contributes about 15 per cent annually to China's GDP, score negative on balance for the first time since the start of the survey. Against the background of excess capacities in the real estate market, the recent developments demand careful observation.

The assessment of China's current economic situation has turned slightly negative again. The survey participants now gauge annual GDP growth for 2014 at 7.3 per cent versus 7.4 per cent in the previous month. In view of diminishing inflationary pressure and slowing employment, an increasing proportion of experts assume central bank monetary policy to become more expansive.

For further information please contact

Dr. Oliver Lerbs, Phone +49 (0)621/1235-147, E-mail lerbs@zew.de

Prof. Dr. Michael Schröder, Phone +49 (0)621/1235-140, E-mail schroeder@zew.de