Country Economic Forecasts > China

Domestic demand growth in China stabilised in November as macro policy easing measures taken earlier this year are having a favourable impact. Overall fixed asset investment and industrial production growth picked up somewhat and consumption continued to expand robustly. However, export performance is being held back by lacklustre global demand and an overvalued currency.A recent shift in policy focus away from the bilateral exchange rate against the US$ to a trade-weighted index of Chinas main trade partners should enable some depreciation of the USDCNY in 2016 to offset the likely strength in the US$. And we expect the government to continue to take incremental measures to support domestic demand. This should ensure that GDP growth does not deviate too much from its growth target that we expect to be set at 6.5%, in line with a similar target for the 13th Five Year Plan.Overall, we expect GDP growth to ease to 6.3% in 2016 and to 6% in 2017 with mining and heavy industry continuing to languish amid persistent weakness in real estate construction.But we have slightly revised up our GDP growth outlook for the period 2017 to 2020, to an average 5.8% from 5.5%, because of our somewhat more favourable assessment of the scope for consumption and service sector-oriented growth and the extent to which imported manufacturing components may be displaced by domestically-sourced items. And the ongoing gradual reform process will support further productivity gains.