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Home > News > Top 10 predictions of Chinese economy in 2018

Top 10 predictions of Chinese economy in 2018

China's central bank is unlikely to raise the benchmark interest rate in 2018, the Shanghai Securities News reported as one of the 10 predictions for Chinese economy this year.

The renminbi exchange rate will be "basically stable at a reasonable equilibrium level", according to the report.

Let's take a look at the top 10 predictions for the Chinese economy in 2018.

No 1 Recovery of the world economy provides a good environment for the Chinese economy

The continuous overall recovery of the world economy provides a good external environment for the development of China's foreign trade and investment in 2018. The global economic growth rate is expected to reach 3.7 percent in 2018, up from 3.4 percent in 2017, as global economic growth started to accelerate in the second half of 2016.

The economic growth in developed countries is predicted to be 2.4 percent in 2018, up from 2.1 percent in 2017. Economic growth in the United States and European Union economies will accelerate to 2.7 percent and 2.3 percent respectively in 2018.

The economic growth in developing countries will reach 4.6 percent in 2018, up from 4.3 percent in 2017, as major emerging economies have experienced industrial structure adjustments and global industry value-chain reconstruction brought by technological improvement and innovation.

No 2 China's export growth to pick up, investment growth to slow down and consumption growth to stabilize

China's export growth will pick up, investment growth will slow down and consumption growth will remain stable in 2018.

China's export growth is estimated to reach 10 percent in 2018, surpassing the pace in 2017.

The growth of investments in fixed assets will slow down to about 6.5 percent and the growth of consumption will be around 10 percent in 2018.

No 3 Moderate inflation helps China's economy run steady

China's consumer price index (CPI), a main gauge of inflation, is expected to rise 2 percent in 2018, higher than in 2017.

The producer price index (PPI), which measures costs for goods at the factory gate, is estimated to rise 3.5 percent in 2018, lower than in 2017.

No 4 Currency credit to maintain a reasonable growth rate

Social financing and credit growth will remain stable with an estimated 12.5 percent to 13 percent annual credit growth rate in 2018.

The annual credit growth and annual increase of social financing will be 15 trillion yuan and 19.5 trillion yuan respectively.

The growth rate of China's broad money supply, or M2, is unlikely to continue to go further down.

No 5 The renminbi exchange rate to be "basically stable at a reasonable equilibrium level"

The exchange rate of renminbi will remain "basically stable at a reasonable equilibrium level", with fluctuations between 6.3 and 6.7 in 2018.

The China Foreign Exchange Trade System (CFETS) yuan exchange rate composite index may experience a slight slide to 94 at the end of 2018.The index is also known as the CFETS RMB Index and it measures the yuan's strength relative to a basket of currencies including the US dollar, euro and Japanese yen.

China's capital liquidity is projected to welcome a slight net inflow and nonreserve financial account surpluses in balance of international payments that may reach $140 billion in 2018. Funds outstanding for foreign exchange may increase 50 billion yuan, compared with a sharp decrease in previous years.

No 6 China to speed up high-quality economic development while maintaining stable growth

China's economic growth is projected to maintain stability with a 6.7-percent annual growth rate, and the speed of high-quality economic development will accelerate in 2018.

Consumption will continue to be a driving force for economic development and the growth rate of tertiary industries will surpass secondary industries, providing new opportunities to high-quality, efficient, precise and innovative service industries.

Structural upgrades in one industry and concentration among different industries brought by supply-side structural reform will increase efficiency and enhance strength to leading companies. New investment opportunities will be brought while cutting overcapacity in some industries.

Rapid development of the digital economy and Internet Plus will bring opportunities to creative and technological companies, with strong innovative abilities in big data and artificial intelligence.

No 7 Policies regulating the real estate market to maintain consistency

The strict four-dimensional control over housing purchases, loans, prices and sales will be continued in 2018.

The restriction of new home purchases will be a normalized tool to curb speculation, and the sale areas for commercial residences are expected to go down 5 to 10 percent year-on-year.

Encouraging more people to rent rather than buy homes will be a top priority of supply-side reform in the real estate industry.

No 8 Proactive fiscal policy will focus more on structural adjustment

In 2018, China will maintain its proactive orientation toward fiscal policy while the structure of fiscal spending should be optimized.

The priority of this year's work is to promote supply-side structural adjustment, improve people's well-being, and give impetus to tax and fee cuts and tax system reforms.

Fiscal policies will support key industries' development, optimize financial expenditure structures and improve the efficiency of the use of financial resources to increase the quality and efficiency of economic development in the future.

No 9 China to adopt a prudent and neutral monetary policy in 2018

China will continue to adopt a prudent and neutral monetary policy and the central bank, or the People's Bank of China (PBOC), is unlikely to raise the benchmark interest rate in 2018.

This is in line with the statement that prudent monetary policy should be kept neutral, and the floodgates of monetary supply should be controlled at the Central Economic Work Conference in December.

No 10 China to tackle international economic challenges actively and properly

China will tackle international economic challenges actively and properly in 2018. Normalization of monetary policy in developed economies may still have an impact on emerging economies' capital flow and currency exchange rates.

The substantial US tax cuts will affect almost all countries that carry out business in trade and investments with the United States.China will pay great attention to the tax cuts and deal with them in an active and appropriate manner.

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