Asia > Eastern Asia > China > China Outlook for 2013-14

China: China Outlook for 2013-14


The country (China) is situated in Eastern Asia, bordering the East China Sea, Korea Bay, Yellow Sea, and South China Sea, between North Korea and Vietnam.
It has borders with Afghanistan for 76km, Bhutan for 470km, India for 3380km, Kyrgyzstan for 858km, North Korea for 1416km, Kazakhstan for 1533km, Laos for 423km, Myanmar for 2185km, Mongolia for 4677km, Nepal for 1236km, Pakistan for 523km, Russia for 3645km, Tajikistan for 414km and Vietnam for 1281km.
Land in China is mountains, high plateaus, deserts in west; plains, deltas, and hills in east.
Chinese land covers an area of 9596960 sq²
The climate is extremely diverse; tropical in south to subarctic in north.
Chinese (singular and plural) speak Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect), Yue (Cantonese), Wu (Shanghaiese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka dialects,


Overview March 2013

The Chinese Communist Party (CCP) is unlikely to face any critical challenge to its hold on power in the estimate period. Limited political reform remains a possibility but will have to wait until next 2013, at the same time as the handover of the CCP leadership to a new generation of politicians will be completed. Real GDP increase will average 8.1% a year in 2012­16, but continued strong increase will be at the cost of strains in the banking system and higher inflation.

We expect consumer prices to rise by 4.2% a year on average in 2012-16, and the threat of a surge in food prices poses upside risks to our estimate. The government will persist in its attempts to reorient the economy towards private consumption and away from its excessive reliance on investment , but it will have only limited success. The authorities will allow the renminbi to appreciate modestly against the US dollar as capital account liberalisation moves ahead steadily. The current-account surplus will fall as import increase outstrips export expansion.

Political outlook

China said that it was "firmly opposed" to a suspected nuclear test carried out on February 12th by North Korea. However, it as well called for a "calm response" to the incident, highlighting the government's unwillingness to abandon its long-term ally.

<span class="\"Apple-style-span\"" style="\"font-size:" 26px;="" \"="">Economic policy outlook</span></p> <p class="\"rtejustify\""> In a sign that it may be tightening monetary policy, in mid-February the People's Bank of <a title="China" href="" _cke_saved_href="">China</a> (the central bank) began to drain liquidity from the economy using open-market operations for the prime time since June 2012. Rapid inflation and rising home prices have re-emerged as concerns for the authorities.<br>  </p> <p> <span style="\"font-size:26px;\"">Economic forecast</span></p> <p class="\"rtejustify\""> We have adjusted our outlook for <a title="China" href="" _cke_saved_href="">China</a>'s current account, which is presently estimate to move from an estimated surplus equivalent to 2.6% of GDP in 2012 to a deficit of 1.2% in 2017. An increase in remittances from foreigners working in <a title="China" href="" _cke_saved_href="">China</a> will push the transfer account into the red from 2013.<br>  </p> <p> <span style="\"font-size:26px;\"">Outlook for 2012-16</span></p> <ul> <li> The handover of power to a new generation of leaders, which began at the November 2012 congress of the ruling Chinese Communist Party, was completed in March at the National People's Congress (NPC).</li> <li> Although the elevation of a younger set of leaders will lead to some shifts in government policy, the relatively conservative line-up unveiled at the party congress suggests that prospects for political liberalisation in 2013-17 are dim.</li> <li> Moves to raise the incomes of the less well-off, and thereby to increase their spending, will form part of the government's efforts to expand the role of consumption in driving economic increase in the estimate period.</li> <li> Monetary policy will return to a tightening stance in 2013 as inflation and economic increase accelerate. The authorities will gradually liberalise interest rates in 2013-17, and this will result in rates drifting higher.</li> <li> The Economist Intelligence Unit has revised down its estimate for economic increase in 2013 to 8.4%, from 8.5% formerly. Government efforts to crack down on graft will have negative side-effects on private consumption.</li> <li> The current account is estimate to move into deficit from 2016, from a surplus equivalent to an estimated 2.7% of GDP in 2012, as increase in imports of goods and services outpaces that in exports.</li> </ul> <p> <span style="\"font-size:26px;\"">Monthly review</span></p> <ul> <li> The government has revised the country's criminal code. Although inclunding some welcome changes, the amendments as well sanction long periods of arbitrary detention by the security forces.</li> <li> The premier, Wen Jiabao, targeted 7.5% GDP increase for 2012, lower than the goal of 8% in 2011, in his address to the National People's Congress (the annual session of the legislature) in March. The inflation target was 4%.</li> <li> A statement produced by an influential Chinese think-tank, the Development Research Centre, and the World Bank called for reforms to the national-owned sector. It as well called for additional labour mobility.</li> <li> Sheng Songcheng, the chief of the central bank's Survey and Statistics office, as well called for economic reform in a statement advocating a ten-year schedule of incremental reforms to open the capital account.</li> <li> Official estimates show that <a title="China" href="" _cke_saved_href="">China</a> has an estimated 25.1trn cu metres of shale-gas reserves. Annual output could reach 6bn cu metres by 2015.</li> </ul> <p> <span style="\"font-size:26px;\"">Related reports:</span></p> <ul> <li> <a href="\" _cke_saved_href="\"\"">China Macroeconomic outlook </a></li> </ul> <p></p>

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