Our ”temperature indicator” for China rises slightly to 6.2 – but the growth outlook remains moderate

11:12 by Hubert Fromlet, Kalmar

Summary
¤ Our so-called “temperature indicator” for the Chinese economy improved somewhat to 6.2 in December 2013 compared to 5.4 in June 2013 (10=extremely overheated). This is number that indicates quite modest growth by Chinese standards. Around 20 China experts from Asia, North America and Europe participated in this survey.

¤ The panel’s GDP projections (average, in brackets the forecasts from June 2013):
2013: 7.6 (7.6); 2013q4 7.8 (7.8); 2014: 7.6 (7.5); 2014 q4: 7.2 (7.3).
China has obviously landed on more dampened growth path.

¤ 78% of the panelists think that the currency renminbi will appreciate slightly during 2014 (1-5%).

¤ 75% of the panelists still see a kind of bubble on the real estate market.

¤ The panel’s confidence in the economic future of China is quite neutral (around 3 in a five year’s perspective on a scale from 1-5; 5=very strong) – but surprisingly somewhat above 3 (i.e. 3.5) in a ten years’ view. The latter result shows implicitly that there is some confidence that China’s reform policy during the current leadership will at least be partly successful.

¤ The three most strongly preferred reform areas seem to be – according to the panel (ranked):
financial markets, the hokou system (for registration), and, side by side: corruption and the environment.

 

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Hubert Fromlet
Visiting Professor of International Economics, Linnaeus University
Editorial board

 

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