Economic Outlook for China Experiences Dramatic Drop

In the March survey (22.02.–07.03.2018), economic expectations for China experienced a considerable drop. The CEP indicator now stands at 1.4 points, 13.3 points lower than in the previous month (February 2018: 14.7 points). This sees the CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, return to its level from January 2018.

The experts’ assessment of the current economic climate is also less positive than in the previous month, with the corresponding indicator dropping 8.6 points to 23.7 points. This figure, however, still indicates a largely positive assessment of the economic situation.

“The euphoria in the face of the exorbitant growth of 6.9 per cent exhibited by the Chinese economy last year seems to have evaporated. At 6.6 per cent, the forecast given by our experts with regard to real GDP growth in 2018 is largely in line with the official target of the Chinese government. The current CEP indicator, which reflects economic sentiment over the coming twelve months, has also adjusted itself to this view of things,” says Dr. Michael Schröder, senior researcher in the ZEW Research Department “International Finance and Financial Management” and project leader for the CEP survey.

The experts’ assessments relating to growth in Chinese exports remained constant in relation to the previous month. This is surprising given that one would have expected the increasing likelihood of a trade war between the US on one side and the EU and China on the other to lead to more pessimistic export expectations. In fact, the level of Chinese exports experienced a strong increase in the first two months of 2018, which may have stabilised expectations. “It remains to be seen how the current tensions over trade will impact China’s growth and exports over the coming months,” says Michael Schröder.

For more information please contact

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