China: A pivotal time for economy - Westpac
The ‘vision’ laid out by President Xi at the National Congress seeks to meet China’s challenges head on, calling for it to become a “fully modern economy” by 2035 and a global leader in innovation, influence and military power by 2050, explains the research team at Westpac.
“Underpinning both goals is a drive to pursue productivity and efficiency and increase the nation’s wealth rather than its debt. President Xi’s belt and road initiative is essential to this ‘new era’, as is the environment and a broader distribution of gains.”
“The implication of the above for the Chinese economy is that we are likely to see growth progressively slow. We anticipate from 6.8% in 2017 to 6.2% in 2018, then below 6.0% from 2019. Public investment will continue, but it will be structured to fit with long–term development objectives not cyclical momentum. For corporates, there is a need to progressively work through SOE legacy debts. In our view, financial reform is also needed for the household sector to manage increasing leverage and their investment decisions.”