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Chinese new five-year plan to be the next big thing – Deutsche Bank

FXStreet (Delhi) – Chief China Economist, Zhiwei Zhang of Deutsche Bank, expects, from an economic perspective, that the most important topic will be the new Five-Year Plan which is the blueprint for social and economic development over the period.

Key Quotes

“The finalized version of this plan should reveal the growth target for the relevant period. Zhiwei believes that while there are still uncertainties on the growth target, he believes that the likelihood of keeping the 7% target is slightly higher than cutting it to 6.5%.”

“He notes that the two possible targets will have very different implications on policy outlook. For example if the target is set at 7%, then he believes the government will have to maintain its loose policy stance and do more easing and as a result the leverage of the economy will rise. While on the other hand if the target is set at 6.5%, it means the government will tolerate slower growth to allow more space for structural adjustments, and so in this case he expects that there will be less stimulus efforts by the government.”

“Zhiwei also noted that he does not expect a stimulus announcement for 2015 at the Plenum given the strategic nature of issues to be discussed.”

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