BOFIT Forecast for China (2008- )


Forecast for the Chinese economy published twice a year. Available also in Finnish by the name BOFIT Kiina-ennuste.

Recent Submissions

  • Bank of Finland; Institute for Economies in Transition (BOFIT) (2019)
    BOFIT Forecast for China 1/2019
    China’s economic growth, which witnessed a slowdown last year, continued to deteriorate in the early months of this year. Although the government has responded with measures to support growth, an already lax fiscal stance and extremely high debt-to-GDP ratio highlight the limits to debt-driven stimulus policies. Adding to the mix, the trade war between China and the United States has exacerbated economic uncertainty. Business-cycle weakness is accompanied by structural factors that depress the growth such as demographic shifts and the government’s failure to move ahead with economic reforms. While China’s economic growth is expected to continue to slow during 2019–2021, it will still outpace growth of the global economy. The risk of a sudden slump of growth has increased significantly. Unreliable official GDP data complicate assessment of China’s true economic conditions.
  • Bank of Finland; Institute for Economies in Transition (BOFIT) (2018)
    BOFIT Forecast for China 2/2018
    China’s economic growth is slowing and the outlook has become more uncertain with the country’s rising indebtedness and turbulence from trade policy disputes with the United States. The country’s adherence to a GDP growth target further complicates economic policy as the stimulus needed to meet that target conflicts with government efforts to manage China’s burgeoning debt problems and to move ahead with economic reforms. Acknowledging that problems with China’ s statistical data make it hard to obtain a clear picture of economic conditions, we nevertheless hold to our earlier forecast that Chinese economic growth remains strong despite slowing to around 5 % p.a. in 2020, the final year in this forecast period. While China possesses resources to deal with many of the challenges it may encounter, the deterioration of economic conditions means that it is important to prepare also for a steeper slowdown in China’s growth than predicted in our baseline forecast.
  • Bank of Finland; Institute for Economies in Transition (BOFIT) (2018)
    BOFIT Forecast for China 1/2018
    The pace of China’s economic growth accelerated slightly last year, with official figures showing GDP growth of 6.9 % p.a. Even if the economic cycle appears on the upswing, growth is undergirded by the government’s heavy-handed stimulus policies. Since the Communist Party’s National Congress last autumn, the policy stance has tightened and the role of the party has been amplified. As a result, we have slightly boosted our GDP forecast for this year, putting it on par with China’s official GDP growth target of “about 6.5 %.” Going forward, high growth fuelled by debt will become unsustainable. China’s debt-to-GDP ratio is already high and will continue to rise in the forecast period. Thus, we expect growth to slow to a more sustainable level of around 5 % by 2020. Several sources of uncertainty from both domestic and international markets cloud China’s economic outlook. Downside risks have increased from our previous forecast.
  • Bank of Finland; Institute for Economies in Transition (BOFIT) (2017)
    BOFIT Forecast for China 2/2017
    China’s economic growth has picked up from last year. Official figures show GDP rose by 6.9 % p.a. in the first half of 2017, but with the expected slowing towards end of the year, growth for this year should come in at around 6.5 %. In 2018 and 2019, economic growth should keep slowing gradually as China pulls back from debt-financed stimulus policies to a more sustainable framework. This gradual slowdown is, above all, a natural evolution for China’s economy that reflects on-going structural changes. The financial market risks are elevated and pose a risk to economic growth – and even more so if China continues to push the economy to the 2020 growth target with stimulus policies. Uncertainties related to Chinese statistical data have made it even more difficult to evaluate economic trends.
  • Bank of Finland; Institute for Economies in Transition (BOFIT) (2017)
    BOFIT Forecast for China 1/2017
    Official Chinese figures show that GDP growth was last year 6.7 % p.a., which is slightly less than in 2015. The trend largely follows our forecast from last September. As before, GDP growth is expected to slow to around 6 % this year and around 5 % in 2018 and 2019. The basic outlook for the forecast period is quite positive as growth should remain robust and the slowdown appears under control. This requires, however, improved discipline with regards to rising debt and more determined implementation of reform policies than we observe now. The government’s strict adherence to a 6.5 % GDP growth target distorts economic policy and encourages data manipulation to an extent that it may already be an issue.