Photographer: Tomohiro Ohsumi/Bloomberg

China's Central Bank Sees Growth Slowing to 6.8 Percent in 2016

Updated on
  • PBOC researchers led by Ma Jun publish 2016 forecasts in paper
  • CPI will accelerate to 1.7% next year from 1.5% this year

Top researchers at China’s central bank said they expect economic growth to come in at 6.8 percent next year as consumer inflation accelerates and real estate sales rebound.

People’s Bank of China economists also cut their 2015 growth forecast to 6.9 percent from a 7 percent projection in June, according to a working paper by the central bank’s research bureau posted to the website Wednesday. Consumer prices will rise 1.7 percent next year versus 1.5 percent this year, staff led by Ma Jun, chief economist at the PBOC’s research bureau, said in the paper. 

The report came hours after a government-backed research institute released a forecast saying growth will slow to between 6.6 percent and 6.8 percent next year.

"We expect that the number of positive factors will gradually increase in 2016," the central bank researchers wrote in the paper. "These supportive factors include the recovery of real estate sales, the lagged impact of macro and structural policies, as well as some modest improvement in external demand."

PBOC researchers forecast fixed-asset investment growth would pick up to 10.8 percent next year from the 10.3 percent increase they estimate for this year. The economists also said they expect exports to increase 3.1 percent next year, reversing the decline in 2015. That contrasted with the other report issued Wednesday by the Chinese Academy of Social Sciences, which forecast a deceleration in investment and a drop in exports.

Structurally Loose

CASS, the country’s top government-backed research organization, said in its report the PBOC should continue to apply “structurally loose” monetary policy.

"Downward pressure on the economy is huge," said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. "But the current consensus is too pessimistic, and I agree with Ma Jun. People underestimate the resolve of policy makers to ensure there’s a gradual slowdown."

Growth will slow from 6.9 percent this year to 6.5 next year and 6.3 percent in 2017, according to the median of economist estimates in Bloomberg surveys. Last year’s 7.3 percent expansion was the slowest since 1990.

Ma joined the PBOC in April 2014 in the newly created post of chief economist of the bank’s research department, having previously been China economist at Deutsche Bank AG in Hong Kong. The department studies topics ranging from monetary policy, macro economics to financial laws and gives other advice to policy makers.

Property investment may gradually stabilize and recover next year, supported by rebounding land and home sales, the central bank’s researchers concluded. Infrastructure investment growth may maintain a relatively rapid pace as the government accelerates approvals for water, rail and affordable home projects, the staff said.

— With assistance by Xiaoqing Pi, and Kevin Hamlin

(Updates to add details of CASS report in third paragraph.)
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