Ten predictions for China's economy in 2015

Updated: 2014-11-05 14:34


Editor's note: Warren Buffett said the future is always uncertain. As China is in a special phase of transformation from an old norm to a new one, it is very difficult to make future predictions, because every rule and routine would probably be broken and many "impossibilities" may become realities in the new era. Based on serious discussion and selection, here are the 10 most important predictions for the next year.

Ten predictions for China's economy in 2015

China's economy grew by 7.4 percent in the first three quarters of 2014. [Fiel photo]

1. The speed of economic growth will not be locked at 7.5 percent. The growth goal will be more flexible.

Next year, the growth target will very likely be reduced. The conditions that didn't exist in 2013 have now been met.

First, slower economic growth is already a consensus. To preserve the 7.5 percent growth is very hard. In history, the central government lowered the growth goals twice, in 1998 and 2011, both times due to the pressure from economic downturns. At the end of 2013, the reason why we still maintained that the goal would not be lowered was because of the core theory that the real estate market is on the rise so the economy is on the rise. But this year is different. The real estate market remains at a low level and the economy continues to grow at a 7.5 percent rate. The full year's growth may reach 7.3 - 7.4 percent. So it is reasonable to lower the goal.

Second, the flexibility for government policies has clearly shrunk. Even the "directed loosening" monetary policy will have expansion effect on "total volume", but the expansion of the "total volume" has its ceiling. Domestically, debt pressure is increasing, and internationally, the U.S. Federal Reserve will raise interest rates and put the RMB exchange rate under pressure. Those internal and external factors and restrictions will directly reduce the room for flexibility in policies.

Third, central government policies are gradually adapting to the new status, the core spirit is to recognize the reality of economic growth, endure the pain of structural adjustment, avoid large-scale stimulus package and promote the transformation and upgrading of the economy through reform.

As for whether next year's goal is 7 percent, 7.2 percent, 7.3 percent or 7-7.5 percent, this will have to be decided by the end of the year's central government economic work meeting. From what can be seen right now, the biggest possibility is the "7-7.5 percent," which is accordance with Premier Li Keqiang's approach of range management and flexible goals.

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