China’s economy will have shown improvement this year but slow slightly in 2018, a top state think tank forecast on Wednesday, with government investment seen easing as leaders look to recalibrate the country’s growth dynamic.
But while the Chinese Academy of Social Sciences estimate was better than its previous outlook it warned of possible trade headwinds from U.S. President Donald Trump‘s protectionist leanings.
At a briefing to release it its annual outlook, CASS said the world’s number two economy would expand 6.8 percent in 2017 and tick downwards to 6.7 percent next year.
The forecasts come as Chinese leaders wrap up a key economic meeting known as the Central Economic Work Conference taking place behind closed doors in Beijing.
The conference will map out plans for next year and is expected to outline policies to implement President Xi Jinping‘s push for quality growth in lieu of high growth targets.
The think tank’s forecast for this year is higher than Beijing’s target of about 6.5 percent and is better than last year’s final reading of 6.7 percent, which was the slowest for more than a quarter of a century.
In last year’s report CASS predicted the economy would grow 6.5 percent in 2017.
State investment and exports have driven China’s spectacular growth, but the think tank forecast fixed-asset investment will decelerate to 6.3 percent next year. The key indicator showed growth of 7.2 percent in the first 11 months of this year.
The outlook comes on the heels of solid economic data in recent months and three quarters of healthy growth.
The economy grew 6.8 percent in July-September, following 6.9 percent in the previous two quarters.
But CASS forecast it would fall to 6.7 percent in the final three months.
Mr. Xi has indicated he is willing to accept lower growth as China tackles financial risk and heavy pollution. He emphasised this point by leaving out new growth targets from his speech to delegates of this fall’s party congress.
Researchers were uncertain about the global trade outlook as Trump embarks on a policy of economic and political nationalism, while the Federal Reserve is expected to lift interest rates – which could lead to a flight of capital from China.
“Trump is saying America first, America is the boss of everything, America’s interests are the priority,” said Jin Baisong, a researcher at the Ministry of Commerce.
“If this type of hegemonic policy comes to pass, with them considering China unfair to us on trade, the policy resolution could be extremely fierce,” Mr. Jin said.