Expectations for the Chinese economy have again worsened in the current
survey period (12/09/2016 – 28/09/2016). The CEP Indicator, which reflects
the expectations of international financial market experts regarding
China’s macroeconomic development over the coming twelve months, has
slightly fallen by 2.2 points to a current negative reading of minus 4.1
points. The CEP Indicator therefore currently lies significantly below the
long-term average of 5.5 points for the second consecutive time, seen in
the period from mid 2013 to September 2016.

In contrast to the decrease in the CEP Indicator, the forecasts for the
annual rate of growth of the Chinese gross domestic product (GDP) have been
revised upwards. A growth rate of 6.6 per cent is now expected for 2016
(previously: 6.5 per cent). In 2017, experts now expect to see a growth
rate of 6.4 per cent (previously: 6.3 per cent). Thus, for the current
survey, the reduction in the CEP Indicator does not transform in a
reduction in point forecasts. This may be interpreted as a first sign of
renewed growth optimism for the Chinese economy.

The inflation forecasts for China reduced mere once again – as already seen
during the months before – and are now at 1.7 per cent for the coming
twelve months. Therefore, inflation forecasts in China become more similar
to those for the United States and Germany and are reflected in the lower
interest rate forecasts. For example, the SHIBOR should decrease to 1.7 per
cent one year ahead. Also the savings and the loan rates are expected to
decrease over the next twelve months. The forecast for the savings rate one
year ahead is 1.2 per cent and for the loan rate 3.6 per cent.

For more information please contact:
Dr. Michael Schröder, Phone +49(0)621/1235-368, E-mail schroeder@zew.de