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China Economic Forecasts and Risk Ratings

Slower economic growth forecasted due to excess capacity, housing glut and debt bubble

With a boost from the industrial sector, China's real GDP rose 6.9% year on year in the first quarter of 2017, up from 6.7% in the fourth quarter of 2016. IHS Markit forecasts that, despite this jump, major cyclical forces stemming from excess capacity, a housing glut and a debt bubble will moderate growth in 2017 to 6.5%. Industrial production growth will also continue to decelerate. It remained below overall economic growth because of cyclical headwinds from excess capacity and the secular trend of the economy's structural transition toward the service sector.

To learn more, visit the China Regional Service.

China’s Near-Term Economic Outlook

  • Economic growth in China rebounded in the first quarter, helped by faster growth in the industrial sector
  • China’s strong first-quarter growth appears unsustainable, as fundamentals of the economy remain constrained
  • China’s economy should slow only modestly in 2017, with policy support attempting to minimize the downturn

China real GDP growth, percent change from prior year, historic and forecast, 2017Q1-2018Q2

China economic growth, percent change from prior year, 2015Q4-2017Q1

Country Risk Rating for China

The government's high-profile anti-corruption drive will continue at least until the next Party Congress scheduled in the fall of 2017, further strengthening Xi Jinping's hold on the party. The population’s increased use of social media combined with a slowing economy will likely catalyze more strikes, while land disputes might decline because of pending land-tenure reforms. On the external front, the Trump administration's proposed punitive tariffs on Chinese imports and taxes on American companies manufacturing in China, although highly unlikely, would prompt China to retaliate by tightening its regulatory norms against foreign companies. The Trump administration's confirmation of the "One-China" policy, in the meantime, reduces the risk of military escalation in the Taiwan Strait.

A note on our risk ratings: IHS Markit derives country risk ratings for 206 countries, based on six separate ratings in each country: Political, economic, legal, tax, operational and security with 22 detailed sub-aggregate risks. These ratings allow you to quantify risk with greater specificity with a scoring system based on a 0.1-10 logarithmic scale. Seven risk bands, from low to extreme, allow you to compare and contrast risk between countries and regions.

Experts

Todd Lee, Ph.D.

Dr. Lee's expertise encompasses an in-depth understanding of China's short-and long-term economic outlook, monetary policy, currency issues and economic reform. He leads a team of economists responsible for global macroeconomic forecasts and analysis, as well as country risk assessments. Dr. Lee has 18 years of experience in economic analysis and forecasting. He joined IHS Markit, now IHS Markit, during the acquisition of Global Insight, where he led both the Greater China Economics Group and Asian Economics Group. Previously, he was a senior economist for Standard & Poor's DRI. He earned his Bachelor of Arts in Economics from the University of California - Irvine, US, and attained his doctoral degree in Economics from Brown University, US. Dr. Lee is fluent in Mandarin Chinese and English.

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Farid Abolfathi, Ph.D.

Dr. Abolfathi's areas of specialization include country risk analysis and macroeconomic forecasting. His research experience in these areas spans more than four decades. He currently heads the Risk Center at IHS Markit where he manages and leads development of various risk services. Dr. Abolfathi currently is responsible for managing three of the company's risk services: the Global Risk Service, the Sovereign Risk Service, and the Banking Risk Service. In addition, he has been part of the international forecasting team of IHS Markit and two predecessor companies. These include Standard & Poor's DRI, a major US economic forecasting organization that became part of Global Insight in 2001, and now is part of IHS Markit. Earlier, Dr. Abolfathi served as senior associate at the Policy Sciences Division of CACI, Inc. from 1974 to 1982, and served as an independent research contractor in Washington, D.C. from 1982 to 1992, as consultant to many US government agencies on economic, defense and foreign policy issues and presented his research findings to intelligence analysts, policy makers and academic audiences.After high school education in London, England, Dr. Abolfathi attended university in the US, attaining a Bachelor of Science from the University of Oregon and both a Master of Arts and a doctorate of Philosophy from Northwestern University.

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Rajiv Biswas

Rajiv previously worked as Director for South-East Asia for The Economist Group. His previous experience includes working for UBS as Executive Director for Asia-Pacific Country Risk and for the Royal Bank of Scotland as an international economist. He has also worked for an international organization, the Commonwealth Secretariat, as a senior economist in the International Capital Markets Department. Rajiv's experience also includes working as a consultant for the United Nations and the Asian Development Bank.Rajiv is a graduate of the London School of Economics, for the B.Sc.Econ.Hons. in Economics, and received his M.Sc. and D.I.C. from Imperial College at London University. Rajiv has published widely on a range of economic, trade and investmentrelated topics, with over 100 published articles. He frequently speaks at international conferences on the global and Asia-Pacific economies, including at World Economic Forum and Euromoney events as well as at United Nations conferences. He regularly appears on international TV programs, including for the BBC, CNBC, Bloomberg, Channel News Asia, CNN and Al Jazeera TV.He is the author of "Future Asia", published by Palgrave Macmillan in 2013, "Asian Megatrends" published by Palgrave Macmillan in 2016 and "Emerging Markets Megatrends" published by Springer/Palgrave Macmillan in 2018.

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