Economic Outlook for China Increases Substantially

According to the current survey for June (6–21 June 2017), the economic outlook for China has once again improved significantly, rising by 9.8 points compared to the previous month. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, is currently at 9.7 points (May 2017: minus 0.1 points), thus once again rising above the long-term average of 5.3 points.

The CEP Indicator has been highly volatile over the past few months. In February, the indicator was as low as minus 4.2 points, before it rose to 14.5 points in March, then to 17.7 points in April, only to fall back to minus 0.1 points in May. "One should, however, be careful not to read to much into the increase of 9.7 points in June as uncertainty remains high in terms of future growth," says Dr. Michael Schröder, senior researcher in ZEW's Research Department "International Finance and Financial Management" and project leader of the CEP survey.

The point forecasts for the Chinese GDP have also increased, with expectations for the second quarter of 2017 climbing by 0.1 per cent to a level of 6.8 per cent. The forecast for the entire year of 2017, however, remains unchanged at 6.7 per cent. However, a somewhat higher growth of 6.6 per cent is expected for 2018 (the prediction in May was still 6.5 per cent).

There has been a marked improvement in the assessments of China's foreign trade compared to the beginning of the year when there was a great deal of pessimism due to expectations surrounding US President Trump's trade policies. This is reflected in the increase in export expectations, which climbed from 29.3 points to 40.8 points in June.

Expectations regarding China's direct investments overseas rose equally sharply, from 31.1 points to 42.0 points, indicating that experts predict a further increase in company acquisitions and shareholdings.

"Experts no longer see any evidence of a trend that the Chinese economy is reducing its internationalisation and global economic ties," says Schröder.

For further information please contact

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