China Business Forecast Report Q1 2014
Business Monitor International
Report Highlight
Core Views
With Chinese economic activity stabilising, there is optimism that growth could accelerate amid proposed free
m...
Major Forecast Changes
We have upgraded our 2013 real GDP growth forecast from 7.5% to7.6% to reflect the recent stabilisa...
About the Publisher

Business Monitor was founded in 1984 by Richard Londesborough and Jonathan Feroze, the
company's join...
About Us
MarketResearch.com provides market research solutions to business professionals
seeking to enhance their business...
For More on this Report and Additional Research

Visit MarketResearch.com
Or call
1-800-298-5699
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China Business Forecast Report Q1 2014 By Business Monitor International

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China Business Forecast Report Q1 2014 By Business Monitor International

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China Business Forecast Report Q1 2014 By Business Monitor International

  1. 1. China Business Forecast Report Q1 2014 Business Monitor International Report Highlight
  2. 2. Core Views With Chinese economic activity stabilising, there is optimism that growth could accelerate amid proposed free market reforms. While we believe that resource price liberalisation, which would loosen the power of state owned enterprise, and labour market reform could help China to grow strongly over the coming years, these reforms are by no means a given considering the opposition from vested interests. Even if reforms are enacted, the dominant driver of the economy in 2014 will be the unwinding of the country's credit bubble, which is likely to undermine economic growth and create further stress in the banking system. Opposing inflationary and deflationary forces will complicate Chinese monetary policy over the coming quarters. Excessive credit growth and record property prices suggest the need for tightening, while subdued headline consumer price inflation, banking sector stress and plunging equity prices suggest there is a case to be made for easing policy. We believe that deflation is more likely than a spike in inflation, and expect the central bank to act accordingly, easing interest rates and providing support to the banking system as credit growth slows, negatively impact the real economy. China's upcoming Third Plenary Session of the 18th CPC Central Committee, set to be held in November, will very likely provide further insight into the scope of economic, financial and social reforms that the government is set to introduce. Hukou reform, the maturation and opening up of the country's financial markets and capital account, subsidy reform, and the wider transition from investment- to consumption-led economic growth are likely to be on the table. President Xi Jinping will likely use the session as a platform on which he can further burnish his anti-corruption credentials, and the party will, as always, look to present a completely unified front. That said, a number of reports continue to reflect a schism between reformist and more reactionary factions within the government, and Xi will likely choose to tread a middle ground between the two extremes.
  3. 3. Major Forecast Changes We have upgraded our 2013 real GDP growth forecast from 7.5% to7.6% to reflect the recent stabilisation in economic activity readings. We have also revised up the outlook for the yuan, now expecting stability rather than weakness. The central bank's determination to resist depreciation over recent months in spite of regional weakness is a positive sign that stability will be forthcoming. Key Risks To Outlook The main downside risk to our economic outlook remains another collapse in external demand, such as the one that occurred at the height of the global financial crisis. This would seriously undermine growth in tradedependent industries and hasten a fall in the property market, potentially leading to an outright recession. There is also a risk that continued fiscal and monetary stimulus by the government and the People's Bank of China could usher in stagflation. The major political risk comes from a rise in social unrest and a surge in public demonstrations against government corruption, inflation and housing affordability, which could be triggered by overseas events or an economic slump. While we do not see the rule of the Communist Party of China as being at risk, such events would still have a detrimental impact on the business environment and could see the party strengthen its grip on the economy to the detriment of growth.
  4. 4. About the Publisher Business Monitor was founded in 1984 by Richard Londesborough and Jonathan Feroze, the company's joint CEOs, who both continue to play a full role within the company. The company was awarded the Queen's Award for Export Achievement in 1997. Business Monitor is a wholly independent company, headquartered at Blackfriars, London, with foreign offices in Hong Kong, New York, Singapore and South Africa. Our corporate mission is to become the world's No.1 Independent Information Provider in its field (Country Risk & Industry Research). Business Monitor International (BMI) is a leading, independent provider of proprietary data, analysis, ratings, rankings and forecasts covering 195 countries and 24 industry sectors. Quarterly updated Country Risk Reports and Industry Market Reports are available for nearly 200 countries and 24 industry verticals. These reports provide in-depth analysis of current risks and opportunities and the future outlook for each market. View This Report View More Reports from this Publisher
  5. 5. About Us MarketResearch.com provides market research solutions to business professionals seeking to enhance their business goals. We provide a number of business intelligence solutions, from individual market research reports from over 700 leading global publishers, to Knowledge Centers where clients can discover deeper business insight products into a topic over time. Or perhaps your business needs a much wider view across multiple industries and topics, if so, our Profound solution allows you to select specific parts (graphs, tables, charts or sections) from different market research reports. Our Account Managers have in-depth knowledge of the publishers and the various types of reports in their respective industries. They give you unbiased and qualitative insights on which reports will best meet your needs. If you are interested in expanding your business or growing your market share, contact us to get a free Consultation to Assess your Market Research Needs. We can help tailor a solution that suits your unique business goals. One of our Account Managers will get right back in touch with you.
  6. 6. For More on this Report and Additional Research Visit MarketResearch.com Or call 1-800-298-5699

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