Research institutions predict China's economy in 2014

In 2013, China's economy was in near danger. Looking forward to 2014, can China's economy maintain its growth momentum? Can the reform signals released by the Third Plenary Session be put into practice? The CEConlines website compiled the forecasts of China's economic trend in 2014 from foreign financial institutions such as Deutsche Bank, Morgan Stanley, Goldman Sachs and other foreign financial institutions based on public information.

1. The overall GDP growth rate remains optimistic

Deutsche Bank strongly optimistic about China's economic growth in 2014 in its report. Deutsche Bank predicts that in 2014, China's gross domestic product (GDP) growth is expected to rise again to more than 8%, reaching 8.6%. This figure is significantly higher than the forecast data previously released by a number of Chinese institutions and international institutions: Bank of China and Bank of Communications expect China's GDP growth rate in 2014 to be around 7.6% and 7.8% respectively; Singapore's DBS Bank forecasts economic growth in 2014. It is on track to reach 7.8%, compared with JPMorgan's forecast of 7.4%.

In this regard, Ma Jun, Chief Economist of Greater China, Director of Deutsche Bank It is believed that there are five main factors supporting the sustained recovery of China's economy:

(1) The economic growth rate of the United States and Europe in 2014 will be significantly higher than that of last year, and the recovery of external demand will significantly increase the growth rate of China's exports;

(2 ) The supply and demand situation of domestic photovoltaic, cement, shipbuilding and other industries with serious overcapacity is improving;

(3) The medical, railway, clean energy, environmental protection and other industries with serious domestic supply shortage will attract more

(4) Since the middle of last year, the "positive expectation management" of the Chinese government has begun to have a positive effect of boosting confidence, so that the trend-adjusted currency velocity in the third quarter of last year began to stop falling and rebound. The improvement in the velocity of money circulation will enable the economy to accelerate growth under the condition of constant money growth rate;

(5) Although the absolute amount of the fiscal deficit in 2014 may not be much different from last year, in the context of economic recovery, " "Fiscal Pulse" will show the expansionary effect of the economy.

In its report, Morgan Stanley raised its previous forecast, raising growth to 7.2 percent in 2014 from 7.1 percent and to 7.4 percent in 2015 from 6.9 percent. Morgan Stanley explained in its report:

(1) Economic growth in the second half of 2013 remained basically stable under a suitable policy environment;

(2) It is expected that the in-depth reform measures announced by the Third Plenary Session of the CPC Central Committee It will be implemented in the first half of 2014. However, Morgan Stanley sees downside risks to demand growth in 2014 from tighter financial conditions. And in 2015, when the effects of the reform measures are gradually manifested in the economy, economic growth will improve further.

Goldman Sachs expects China's GDP growth rate to reach 7.8% in 2014, only 0.1 percentage points higher than its forecast of China's GDP growth rate in 2013 (7.7%), but the growth quality in 2014 is higher, reflected in more Driven by consumption rather than relying on credit growth. Goldman Sachs expects steady, healthier economic growth to boost investor confidence in potential reform dividends, which could boost stock market performance.

2. RMB maintains the trend of appreciation Although the Chinese government has stated that it will maintain a proactive fiscal policy and a prudent monetary policy and keep the benchmark interest rate unchanged, Morgan Stanley predicts in the report that China's fiscal and monetary policy in 2014 may change. Gradually tighten. The People's Bank of China is expected to raise the policy rate by 25 basis points in 2015 when inflationary pressures continue to build due to a narrowing of the output gap and the CPI exceeds the official target of 3.5%. The rate of RMB appreciation will accelerate slightly. By the end of 2014, the exchange rate of RMB against the U.S. dollar is expected to reach 5.91 and 5.74 by the end of 2015. Goldman Sachs predicts that the Chinese government will adopt a relatively prudent monetary policy in 2014 with a prudent fiscal policy. Among them, monetary policy will be more cautious to curb high leverage and potential asset bubbles, while the fiscal deficit will remain in line with the expected value in 2013, but will be more structurally weighted - reducing investment and expanding consumption and exports. Goldman Sachs expects the yuan to appreciate slightly in the short term.

3. China's economy is still full of challenges in 2014

Although China's economy is generally optimistic in 2014, changes in the global market and economic reforms have also brought a number of volatile factors, posing challenges to China's economy. The following factors can be summarized from the reports of foreign financial institutions:

(1) Fluctuations in the external economy, especially the impact of the US withdrawal from QE on emerging market countries. Based on the premise of the withdrawal of QE, the economic outlook of the United States has improved, and the withdrawal of quantitative easing should have little impact on China's export industry. However, if the Fed's QE exit leads to a stronger dollar and a broad-based depreciation of emerging market currencies, this will put policy pressure on a small depreciation of RMB/USD in 2014.

(2) The housing prices in domestic first-tier cities (and possibly some second-tier cities) may continue to rise, and the tendency of real estate bubbles is worrying.

(3) High corporate and government debt is an important uncertainty factor for China's economy in 2014. While the likelihood of a large-scale debt crisis is low, any aggressive restraint on credit growth risks slowing economic growth.

(4) The geopolitical uncertainty in East Asia and other regions will make the relationship between China and Japan, Vietnam and the Philippines and other countries tend to be tense, which will have a certain negative impact on exports.