China economy

CCXI chairman expects China’s economic growth to slow to 6.7pc in 2018

Recent economic data indicated the Chinese economy is on a firmer footing this year than last. In the first three quarters, it grew 6.9pc, according to National Bureau of Statistics data

PUBLISHED : Friday, 15 December, 2017, 8:45am
UPDATED : Friday, 15 December, 2017, 9:09am

One of China’s most influential credit ratings firms has added its considerable weight to the growing list of commentators predicting the country’s economic growth will slow next year.

Yan Yan, chairman of China Chengxin International Credit Rating (CCXI), said in Shanghai the nation is still coping with economic headwinds and reforms, and it’s too early to suggest a “new cycle” of faster growth is in sight.

CCXI expects the economy to grow 6.8 per cent in 2017 before further slowing to 6.7 per cent in 2018, he told the Moody’s & CCXI 2018 China Credit Outlook Conference in the city on Thursday. Beijing-based CCXI is a Moody’s affiliate.

Recent economic data indicated the Chinese economy is on a firmer footing this year than last.

In the first three quarters, it grew 6.9 per cent, according to National Bureau of Statistics data. In 2016, the world’s second largest economy expanded 6.7 per cent, its slowest growth in 26 years.

This stronger-than-expected economic resilience has already led some economists and market watchers to argue China appears set for a “new cycle” of growth, stepping out of years of slower growth, with a rosier outlook ahead.

But CCXI’s Yan insists it’s still too early.

“We expect the Chinese economy will still move nearer to its trough in 2018 as the country presses ahead with reforms and fine-tunes parts of its pro-growth policies,” Yan said, noting that fixed asset investment could remain soft next year.

Higher household debt could also curb consumption growth in 2018, he added, quoting average household debt of 53 per cent compared with total income in the first half of this year, up from 50 per cent throughout 2016, meaning less consumer spending.

Yan’s caution is shared by Fan Gang, a professor at Peking University and one of China’s most prominent economists and most active reform advocates.

He said earlier this month it could be years before it embarks on a sustained new cycle of strong growth.

China is still in the process of coping with challenges and problems, Fan noted, thanks to overheated economic growth between 2004 and 2007, and 2009 and 2010.

He said China’s own past experience clearly shows the path back to strong growth if normally gradual, taking some eight years to enter a new cycle last time.