Economic Outlook for China Declines Further

In the April survey (20.3.–05.04.2018), expectations for the Chinese economy fell once again, albeit slightly. The CEP indicator has dropped 2.4 points since last month, bringing it to a current level of minus 1.0 points (March 2018: 1.4 points). The current results of the CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, show that economic conditions are expected to remain largely unchanged over the current year.

By contrast, expert sentiment regarding the present economic environment has improved since March, with the indicator for this question rising by 6.6 points to 30.3 points. This shows that the surveyed experts have a positive assessment of the present economic situation. Looking forward, however, the present economic environment is not expected to improve over the next twelve months.

Real GDP expectations remain unchanged in relation to the last month’s survey, with the participating experts forecasting growth of 6.6 per cent in 2018 and 6.5 per cent in 2019.

“The current survey results were significantly impacted by international political discussion concerning trade barriers, tariffs, and the looming trade war between the US and China,” says Dr. Michael Schröder,senior researcher in ZEW’s Research Department “International Finance and Financial Management” and project leader of the CEP survey. Expectations concerning Chinese export growth fell by 41.1 points to minus 19.5 points. “The experts thus expect a considerable decline in Chinese exports,” says Schröder.

This decline is even anticipated to impact China’s share of global trade, as the current reading of 14.1 points for this question reflects a considerable weakening of expectations in relation to last month’s result of 28.4 points. 

“Overall, the surveyed experts anticipate a considerable deterioration in Chinese trade activities, as the outlook has also worsened with a view to Chinese direct investment abroad and foreign direct investment in China,” Schröder concludes.

For more information please contact

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