Market Report, "China Business Forecast Report Q1 2015", published

From: Fast Market Research, Inc.
Published: Thu Jan 01 2015

Core Views

* Beijing will continue to implement positive structural reform measures such as deposit rate liberalisation and local government fiscal reforms. That said, we believe that the People's Bank of China will also continue to ease policy in order to support economic growth, and that high debt levels are therefore unlikely to be addressed in the near-term.
* Xi Jinping has largely consolidated his leadership position, and we believe that he is firmly in control of the Communist Party. This means that policy-making will remain highly centralised and generally cohesive over the medium term. While there remain divides on how to manage the economy, we continue to believe that the government will opt for the middle road of structural reforms with moderate monetary and some fiscal stimulus.

Full Report Details at

Major Forecast Changes

* Following the PBoC's surprise interest rate cut to 5.60% in November 2014, we believe that the central bank has tipped a significant shift in its monetary policy agenda. Past precedent suggests that more cuts will follow, and we have downgraded our end-2015 interest rate forecast to 5.20% as a result.

Key Risks To Outlook

* A key 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 trade-dependent industries and hasten a fall in the property market, potentially leading to an outright recession. Given the slowdown in the EU and Japan, a significant drop in performance from the US would make this scenario considerably more likely.
* A hard-landing scenario is also a key risk in China, as falling property prices amid rising domestic debt levels could set the stage for a financial crisis. While we believe that this eventuality will be averted over the next few years owing to the government's considerable resources, such an outcome cannot be entirely ruled out. In this case, real GDP growth would slow...

The China Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in China and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of China's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

* Forecast the pace and stability of China's economic and industry growth through end-2018.
* Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
* Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.

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