China’s Economic Growth—Broad-Based Slowdown at the Beginning of 2014

MAPI Economist Yingying Xu explores the slowdown in China’s recent economic growth and provides a forecast for GDP and industrial production growth. She discusses trade, housing prices, credit and lending, and inflation.

With weakened domestic demand, manufacturing activities slowed significantly in the first quarter of 2014. Industrial production growth decelerated from 9.7% in December to 8.6% in January and February. This is consistent with readings from electricity production and the purchasing managers’ index. The recent weak economic data have spurred speculation that the government will launch a series of policy measures to stabilize growth.

China’s premier recently announced continued acceleration in fiscal spending on public investment projects in transportation, housing, and pollution control to stabilize growth in the near term. Monetary policy might also need to be loosened up to ease liquidity conditions.

We maintain our forecast that inflation-adjusted GDP growth in China will be around 7.2% in 2014. Industrial value-added is expected to increase 9%.

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Publish Date: 
Wednesday, April 2, 2014