Baltic Business Research

¤   Our so-called overheating indicator for China  – derived from a survey with China specialists all over the globe – gained some temperature in December compared to May 2012 (6.5;  May:2012: 4.9;  1-10; 10=extremely overheated). The current GDP-growth temperature does not indicate any overheating in the general economy.

¤   GDP forecasts for China (average, percent)    2012: 7.4     2013: 7.9      2014:  8.1
For both 2013 and 2014, GDP predictions are characterized by downward biases – though on a somewhat more encouraging trend. I personally would see all three forecasts about a quarter percentage point higher and tend, consequently, somewhat more to an upward bias.

¤   One of the panel’s assumptions for Chinese growth forecasts is that around two thirds of our panel members count on a gradual but relatively modest recovery in 2013/2014 in the OECD area as a whole. Approximately, one third believes – on average – in a continued weak and disappointing performance of the entire OECD block. China’s growth sensitivity that is related to the European crisis is considered to be at 5.6 (scale 1-10; 1=no sensitivity at all) – which is not negligible!

¤   Three fourths of the panelists predict that the Chinese currency renminbi (RMB) will appreciate slightly during 2013 (by 1-5 percent).  All the other remaining panelists assume the RMB to remain more or less stable.

¤   100 percent of the panelists think that there is still a dangerous price bubble on the real estate market. When it comes to the Chinese stock market, however, our China experts seem to be markedly less concerned about potential bubble risks.

Hubert Fromlet

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China “Overheating/GDP-growth Temperature Indicator” – Linnaeus University (Linnéuniversitetet)