China Economic Panel (CEP) by ZEW and Fudan University - Economic Expectations for China Decline

In October the CEP-Indicator of Economic Sentiment for China declines to 4.5 points. The CEP-Indicator captures the expectations of financial market experts regarding the economic development in China over the course of the next twelve months. This month’s decline is due to a larger share of analysts predicting economic activity to dampen in the upcoming months. At the same time, the share of experts expecting a rise in China’s overall economic conditions within the next twelve months drops to 45.5 per cent.

Although expectations on future economic development have already started to decline with last month’s survey, the assessment of current economic conditions, however, yields a more optimistic view. The share of analysts considering China’s current economic situation as "good" or "very good" increased thereby amounting to almost 40 per cent.

This month’s decline in economic expectations doesn’t affect predictions of key macroeconomic figures. Expectations for interest rates, inflation rate and growth rate projections remain nearly unchanged compared to last month’s survey.

Every second analyst taking part in the survey considers a rise in employment figures within the next twelve months to be very likely. A growing share (84.4 per cent) of those surveyed also expects domestic demand to rise further. This may be seen in correlation to an increase in China’s imports which is predicted by the majority of analysts (89.7 per cent).  Meanwhile the share of those expecting China’s exports to decline slightly exceeds 25 per cent.

Experts taking part in this month’s survey unanimously conceive turnovers to be rising in all business sectors. In particular, machinery and engineering businesses are expected to regain momentum. More than 50 per cent of the questioned analysts predict climbing sales figures in upcoming months. The information and communication technology sector as well as services are considered to be the most progressive in terms of turnover growth rates.

According to analysts, real estate prices may only increase moderately in the next months in China. In particular, Shanghai and Beijing are expected to exhibit a less intensive rise in housing prices. Shanghai is still predicted to experience the most positive development when compared to other major cities in China. Expectations, however, are slightly lower than last month. This may be seen in connection with raised concerns on part of investors. "A recently published list of restrictions affecting activities within the new Shanghai free trade zone may to some degree cause uncertainty about the viability of potential investments”, says Dr. Gunnar Lang, Deputy Head of ZEW Research Department International finance and Financial Management".

For further information please contact

Dr. Gunnar Lang, Tel.: 0049-621-1235-372, E-mail: lang@zew.de