Slump in Expectations for Chinese Economy

The latest survey carried out in August (17/08/2016 – 31/08/2016) indicates
that expectations for the Chinese economy have worsened. The CEP
Indicator, which reflects the expectations of international financial
market experts regarding China’s macroeconomic development over the coming
twelve months, has fallen by 8.5 points to a current negative reading of
minus 1.9 points. The CEP Indicator therefore currently lies significantly
below the long-term average of 5.8 points, seen in the period from mid 2013
to August 2016.

Expectations for the annual rate of growth of the Chinese gross domestic
product (GDP) have also been revised downwards. Growth of 6.5 per cent is
now expected for 2016 (previously: 6.6 per cent) and in 2017, experts now
expect to see growth of 6.3 per cent (previously: 6.5 per cent).

There currently seems to be little worry of inflation in China. In
comparison to the still very high rate of growth, inflation expectations
for 2017 remain rather low at 2.2 per cent. Expectations are indeed lower
than in the previous month. Together with decreasing expectations for the
rate of change of the money supply M2, this might imply further falls in
the expected rate of growth.

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