CONF: China’s 2019 economy forecast stable, decline modest
China’s GDP growth is expected to ease to 6.6% on year for 2018, down from 2017’s 6.8%, but it is still within the government’s target of around 6.5%, Zhang acknowledged. For next year, overseas and domestic research institutions and organizations are predicting around 6.2-6.5%, he noted.
“Notwithstanding the exact numbers, it is generally acknowledged that China’s economy will slow down next year,” he said, which will contribute to challenges internally such as the slow-down in fixed asset investment, while externally, Sino-US trade friction is the “biggest uncertainty”, Zhang said. Thus, China’s GDP growth will slow down though the degree will be moderate, he told delegates.
“The trade friction between the China and the US is unlikely to be resolved completely via one or two high-profile meetings, so we have to be prepared for this to be a medium- and long-term issue,” he said.
Inside China, growth in fixed asset investments in infrastructure construction and property will decelerate further next year, Zhang stated.
FAI in infrastructure, mostly being funded by governments, has already been slowing down. The growth over January-October was 3.7% on year, and the actual growth was negative if other factors such as inflation are taken into consideration, he explained. Moreover, investment into a wider scope of infrastructure including items such as transportation, warehousing and logistics grew only 0.3% on year over January-September, which was far lower than the 15.9% year-on-year growth on same terms for the same period of 2017, according to him.
As for the property market, it is hard to see this growing substantially in 2019, and the strong performance over the past few years was mainly due to the robust property sales in 2015, he said. Manufacturing industry growth will be curtailed next year too because of the decline in demand, according to him.
“China’s economic growth has been in catch-up mode and to some extent will experience a slow-down after the record of rapid growth. (But the slow-down) is also partly due to our economic planning, as we are shifting our economic development model to quality from quantity,” he said.
In the medium and long term, though, China’s economy still has great potential to grow, he said confidently, warning that “China should not be chasing after high growth via investments, because that would be unsustainable. It would be like drinking poison out of thirst.”
Written by Hongmei Li, li.hongmei@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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