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) (2020)
    BOFIT Forecast for China 1/2020
    China’s economic growth was already slowing before the outbreak of the coronavirus epidemic in the latter half of January. The epidemic and strict measures imposed by the government to rein in the accelerating infection rate brought China’s economy to a standstill. While we are now witnessing a recovery of the economy that is supported by stimulus measures, it is clear that some lost production will never be made up. Accordingly, our forecasts have been revised downwards. We now estimate that China’s real GDP will turn negative this year, but as the situation normalizes, growth is likely to be impressive next year before falling back to the earlier trend. Downside risks have dramatically increased due to the unpredictable fallout from the coronavirus pandemic.
  • Bank of Finland; Institute for Economies in Transition (BOFIT) (2019)
    BOFIT Forecast for China 2/2019
    The slowdown in growth continues as China struggles with a shrinking labour force, ineffectual allocation of capital, an increasing role of the state in the economy and postponement of necessary structural reforms. Adding to this is the business cycle downturn and escalating trade tensions during the past year. Given China’s rising public-sector deficit and soaring debt ratio, any room for stimulus is likely to be limited. With unreliable official figures that often fail to capture economic trends, it is more challenging than ever to assess China’s actual economic conditions. Nevertheless, we expect China’s economic growth to slow this year by about one percentage point from 2018 and slow further in the next two years of our forecast period by just under one percentage point a year. The deteriorating financial positions of Chinese corporations and increasing financial market risks raise the likelihood of a more rapid slowdown in growth.
  • 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.