China’s Macroeconomic Outlook (eBook)

Preface 6
Acknowledgements 7
Executive Summary 9
Contents 14
Contributors 16
1 China Economic Performance in 2016 17
1.1 Weak Investment and Decelerated Export Growth Increase the Contribution of Consumption to GDP Growth 19
1.2 The Growth of Private Investment Dropped Significantly, and that of Fixed Assets Investment Continued to Fall 20
1.3 RMB Devaluated Significantly, While the Growth of Trade Decelerated 24
1.4 The Continued Slowdown of Residents’ Real Income Growth Inhibited the Consumption Growth 26
1.5 The CPI Rose Modestly and the Decline in PPI Narrowed 28
1.6 Though the Monetary Policy Maintained Loose, Its Role of Boosting Investment Is Still Limited 28
1.7 The Decline in the Growth of Fiscal Revenue Has Significantly Reduced the Growth of Fiscal Expenditure 29
2 Quarterly Forecast for 2017–18 35
2.1 Assumptions on Exogenous Variables 35
2.1.1 Growth Rates of the United States and the Euro Area 35
2.1.2 The Exchange Rates 36
2.1.3 Growth Rate of the Broad Money Supply (M2) 37
2.2 Quarterly Forecast of China Major Macroeconomic Indicators in 2017–18 37
2.2.1 GDP Growth Rates 37
2.2.2 Major Prices Indices 39
2.3 Growth Rates of Other Major Macroeconomic Indicators 40
2.3.1 Growth Rates of Exports, Imports, and Foreign Exchange Reserves 40
2.3.2 Growth Rates of FAI 41
2.3.3 Growth Rates of Consumption 44
3 Policy Simulation: Effects of Rebalancing the Chinese Economy 47
3.1 Background 47
3.2 Model Settings 51
3.2.1 Production Function 51
3.2.2 Conduction Mechanism Diagram 52
3.3 Simulation Scenarios Planning 55
3.4 Simulation Results 56
3.4.1 Scenario I: Consumption Structure Transformation and Upgrading 56
3.4.2 Scenario II: Combined Effects of the Mixed Ownership Reform and Deleveraging 58
3.5 Conclusion 61
4 Policy Implications and Suggestions 63
5 Comments and Discussions 66
5.1 Macroeconomic Policy Should not Be a New Bottle Filled with Old Wine 66
5.2 China’s Economic Growth Will Reach a Turning Point 67
5.3 The Global Economy Faces Three Main Issues 68
5.4 China’s Slowdown in Economic Growth Is Inevitable 69
5.5 Manufacturing Will Usher in a “Small Revolution” 70
5.6 Key Policies to Be Implemented as China Moves Towards High-Income Economies 71
5.7 Macroeconomic Factors Should Be Studied in Depth 72
Appendix: Report on Questionnaire Survey on China’s Macroeconomic Situation and Policy in 2016 74