Economic Expectations for China Characterised by Cautious Optimism

Expectations regarding the development of the Chinese economy have slightly improved in the current survey period (19/04 – 03/05/2016). Rising to a level of 9.4 points, the CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, has exceeded its long-term average of 6.2 points for the first time in many months.

However, the point forecasts for the Chinese GDP have remained unaffected by the fluctuations displayed by the CEP Indicator in the past few months, and now stand at 6.6 per cent for the current year and at 6.5 per cent for 2017.

It seems therefore that private consumption remains the central pillar of the Chinese economy. The moment the expectations of the experts materialise and employment increases, the income of households will continue to rise and private spending will go up. In total, the results of the survey show that the survey participants expect the economy to stabilise at a moderate level.

Despite the hint of optimism regarding the further economic development, the experts only show little confidence in Chinese stock markets in their twelve-month forecasts. On average, share indexes are expected to see a decline in prices. This holds particularly true for the Hang Seng Index and the Growth Enterprise Market Index.

Given the slightly improved economic outlook, the experts also expect an appreciation of the Yuan against the USD, associated with a lower outflow of foreign currency deposits.

For more information please contact

Dr. Michael Schröder, Phone +49(0)621/1235-368, E-mail: schroeder@zew.de