Business / Complex choices to suit 'new normal'

Continued and steady economic restructuring expected

( Updated: 2014-12-30 15:58

Editor's note: This year's economic expansion is widely expected to be the slowest in many years, and the central leadership envisions a "new normal" for the pace GDP growth and its structure going forward. What will unfold in 2015 - sustained, rapid expansion or an orderly transition to slower growth? China Daily asked a group of economists and analysts on their expectations for the economy in 2015.

Continued and steady economic restructuring expected


What is the most likely outcome for China's economy next year-sustained, rapid expansion or an orderly transition to slower growth?

Our forecast for 2015 full-year GDP growth is 7.2 percent, with consumption, investment and net exports contributing 3.4 percentage points, 3.1 percentage points and 0.7 percentage point, respectively.

The fundamental growth drivers may not change much in the near term, despite on going economic rebalancing. The positive drivers include relatively stable growth in the service sector and the constructive outlook for China's current-account surplus. A major drag on overall growth is the continued slowdown in real estate investment growth and persistent industrial overcapacity.

What is the most important indicator that observers should use when judging whether a transition has taken place? How can China achieve the goal implied by that indicator?

Despite the gradual slowing in GDP growth, signs of economic rebalancing are encouraging. Notably, the service sector is making up a larger share of the economy, the labor market has remained relatively stable and there has been a gradual rebalancing in the distribution of national income toward the household sector and away from the corporate and government sectors.

We expect adjustment in the property sector and overcapacity in several industries will continue to weigh on manufacturing in 2015. But the service sector will likely continue its stable expansion. Thus, we expect continued, steady economic restructuring.

What is the biggest concern for the Chinese economy in 2015? How can China address that concern?

The real estate market slowdown turned out to be the biggest macroeconomic drag in 2014.The property market adjustment will continue in 2015 as oversupply persists. This adjustment is having a significant impact on overall growth. Real estate investment growth will slow from 20 percent in 2013 to about 11 to 12 percent in 2014.We estimate that will shave one percentage point from GDP growth.

However, the financial impact of the real estate market correction has been less than expected.

Housing prices may decline further but should stabilize in the second half of 2015.From peak to bottom, we forecast the price decline will be in the 5 to 10 percent rang eat the national level, with larger declines in second- and third-tier cities.

What is the most resilient part of China's economy? How can China best utilize its strengths in this area?

Economic reform will continue in 2015 and be the largest source of resilience. We expect further reforms in financial, fiscal, administrative, State-owned enterprise, housing and land policies.

We expect many small steps in all areas including interest-and exchange-rate reforms, capital account openness and yuan internationalization.

The government will improve budget management, with local government debt being the critical issue. It will improve the tax system and establish a new system that better aligns fiscal spending and revenue.

We believe the State Council is on track to achieve Premier Li Keqiang's target that about one-third of existing administrative approval items should be eliminated during his term, which runs from 2013 to 2018.

Local-level SOE reforms appear to be more aggressive and flexible in terms of setting targets on achieving mixed ownership.

The near-term focus of land reform is to clarify land rights, which in our view is necessary for more meaningful reform.

The objective of land reform is to clarify and stabilize land ownership and contractual rights and allow for the transfer of land management rights.

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