China's 2018 economic outlook positive

China should face a relatively favorable external economic environment next year, with global GDP growth, according to our (Oxford Economics) estimate, expected to increase to 3.2 percent in 2018. While global import growth is likely to slow next year, it should remain higher than in 2015-16, supporting export growth.

Domestically, policymakers are expected to remain focused on reducing financial risks and deleveraging parts of the financial system. But China's leadership is likely to remain committed to doubling GDP between 2010 and 2020. As a result, China's GDP growth target for 2018 is likely to be "around 6.5 percent" and policymakers may make efforts to gradually, rather than suddenly, slow down credit growth in the coming years.

Reflecting the gradual tightening of monetary and financial policy, China's domestic demand is expected to cool down next year, especially in real estate and infrastructure investment. With consumption momentum remaining solid, and outpacing investment, real GDP growth should ease from 6.8 percent this year to 6.4 percent next year.