LNU’s China Panel No 21 – February 23, 2016

14:24 by Hubert Fromlet, Kalmar

“Our (Growth-)Temperature Indicator Falls to 4.0 – the Second Lowest Ever ”

Between January 8 and February 4, we made our regular winter survey on growth conditions in China. The structural part of our survey is addressed this time in the beginning of the year – and not, as usual, in spring. Almost 20 China experts participated, coming from Europa, North America and Asia. Best thanks to all of them!

¤ Our so-called temperature indicator for the Chinese economy fell visibly to 4.0 from 4.3 last spring. This is only 0.1 percentage point above our all-time low in spring 2009.

¤ There is a slight downward revision for GDP growth in 2016 (to 6.3 from 6.5 % last May, based on official statistics for 2015) – with some downward bias. 6.3 percent is probably quite close to the lower limit of what officials currently can accept. But the quality of GDP growth is considered by China’s top politicians as more important than the pure numbers. The main contribution to GDP growth in 2016 is expected to come from consumption.

¤ The panel also identified the three biggest short-term problems: 1) financial markets (generally), 2) debt problems, 3) weaker currency (RMB).

¤ Some structural issues (scale 1 – 10, 10 = very good) on
a) quality of economic statistics: 3.7
b) quality of corporate accounting: 3.5
c) transparency of financial markets: 3.5
d) marketization of the banking system: 3.8
e) marketization of the stock market: 3.7
f) marketization of the bond market: 4.5


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Download the full report here, ChinaPanelSurveyFebruary2016.pdf

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


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