FXStreet (Delhi) – Research Team at Commerzbank, expects cautious growth picture for China and predict slower growth than the government targets in its five-year plan. While the government is likely to aim at 6½% for the period 2016 to 2020, they expect 6.3% for 2016 and 6.0% for 2017.
Key Quotes
“In reality, growth should already be lower now. This is the message from Chinese imports, which have been falling in year-on-year terms since the beginning of the year.”
“Even so, despite the scepticism, we do not go as far as to predict an economic collapse for China. The government and its banks have sufficient resources to reduce the imbalances of the Chinese economy over time.”
“Public debt is relatively low, for example, at 42% of GDP, and state-owned banks should support highly indebted companies in times of difficulties. Indeed, such action prevented a recession in Japan at the beginning of the 1990s even though real estate and equity prices had previously collapsed.”
“Another factor arguing against a crash is the observation that China’s growth has been slowing for some years and a gradual normalisation is therefore already underway.”
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