China Economic Panel (CEP) of the Centre for European Economic Research (ZEW) and Fudan University (Shanghai) - Economic Outlook in China Picking up Again

Economic expectations in China have returned to positive territory in October 2015. Following several months characterised by a downward trend, the CEP Indicator has stabilised in the current survey period (October 12-28, 2015), rising from minus 9.7 points to 8.3 points. The CEP Indicator reflects the expectations of international financial market experts regarding China's macroeconomic development over the coming twelve months. The current GDP forecast for 2015 is 6.9 per cent, a month-on-month increase of 0.1 per cent. Experts continue to expect a GDP growth of 6.6 per cent in 2016.

The improving economic sentiment, as reflected in the CEP Indicator, shows that the surveyed financial market experts believe in the success of the Chinese government's efforts to stabilise the economy. The survey participants also expect a further slight decrease in interest rates, which could also contribute to the optimistic sentiment.

The prognoses for 2016 with a marginal reduction of GDP growth are still in line with the macroeconomic figures included in the next five-year plan. However, the forecasts are already manoeuvring close to the bottom of the spectrum provided by the government.

Stock markets are also expected to increase, in accordance with the slightly improved macroeconomic outlook in China.

Domestic consumption is considered an important growth engine in the People's Republic. Services, IT, and assurance are assessed significantly stronger in this context than the consumption of goods.

The assessments of the automotive and engineering industries as well as the construction sector continue to be rather weak. This reflects some uncertainty in economic expectations concerning long-term consumer goods, corporate investments, and contruction activity.

Particularly striking is one forecast when it comes to regional business development: Experts expect the important port city of Tianjin in the North of China, which was the site of a series of major explosions in August 2015, to catch up.

For further information please contact

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