Country Economic Forecasts > China

The annual Government Work Report and objectives of the 13th Five Year Plan (2016-20) confirm that economic growth remains the key objective. The aim of doubling GDP and per capita income by 2020, set in 2010, calls for average growth of at least 6.5% in 2016-20. The target for 2016 was set at 6.5%-7%. However, the external environment remains challenging amid sluggish global demand and heightened volatility in financial markets, depressing export growth and value added in industry. Meanwhile, domestic demand is relatively subdued as activity in the real estate sector is affected by large inventories while private consumption is easing amid weaker wage growth and greater uncertainty. The ambitious growth target means that a more expansive macroeconomic stance will be needed. Indeed, the Government Work report confirms that policy will be used to support growth, with a rise in the official government deficit on a cash basis, continued quasi-fiscal activity and generous monetary targets. However, given the external and domestic headwinds, we continue to expect GDP growth of 6.2% this year.