SHANGHAI — China’s economic growth is forecast to ease to a slower-than-expected 6.5 percent in 2016, according to a government report.
The State Information Center, which is part of the National Development and Reform Commission, published an article in the China Securities Journal predicting the nation’s growth would slip to 6.5 percent, the consumer price index would increase 1.5 percent and producer price index would fall 3.5 percent.
China’s economy decelerated to growth of 6.9 percent in the third quarter this year, its slowest pace since 2009, but Premier Li Keqiang said last week that the country was still on track to achieve its objective of 7 percent growth in 2015.
Following the release of China’s next five-year plan in November, which covers the period from 2016 to 2020, President Xi Jinping was quoted as saying the country needs to grow at least 6.5 percent over that period in order to realize the government’s target of doubling people’s average income and the size of China’s economy by 2020 over 2010 levels.
According to Torsten Stocker, partner at management consulting firm AT Kearney people should “sort of” take these figures as a proxy for an official government forecast, given the source.
“These numbers just provide a general backdrop to expected underlying economic growth. More important is where that growth will come from, in particular, what steps the government will take to further shift to consumption,” he said.
Peter Williamson, professor of international management at the University of Cambridge’s Judge Business School, agreed that this release of information is a deliberate move from the government to reiterate announcements from the President and Premier that economic growth won’t fall beneath 6.5 percent.
“I think this announcement is to reassure the markets that the Chinese government will move [with stimulus if necessary] to try to make sure that growth does not fall below 6.5%. Needs to be seen in the context of putting a ‘floor’ under the dire predictions of some others,” he said.
On Dec. 1, U.S. investor State Street Global Advisors predicted China’s GDP growth will fall to 6 percent in 2016, dragged down by excess manufacturing capacity, persistent deflation and a surplus in inventory.