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Chinese Central Bank predicts 2016 GDP growth rate to be 6.8%, requiring more Chinese business people to adapt to the concept of the “new normal status”

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For most modern economies, a growth rate in the high single point percentages would mean that the country was doing well and the government would feel understandably comfortable. The citizens on the other hand may not really understand the significance of such a performance, and in reality, may not actually care that much about any figures. China on the other hand and the Chinese people tend to contradict the norm elsewhere in the world.

On December 16th, the People’s Bank of China Research Bureau released a working paper estimating that the GDP growth rate is predicted to be 6.8% in 2016, 0.1% lower than the 2015 estimate, and the 2016 Economic Blue Paper issued by the Chinese Academy of Social Sciences also estimated growth between 6.6% and 6.8%.

“So far, China’s economy has reached a new normal status where structural reform will be accelerated and the growth rate will still tend to decrease. Externally, the global trading environment is still poor with weak demand from outside of China and this is not going to change. Based on both conditions, we estimate the 2016 GDP growth rate to be 6.6% to 6.8%.” said Xuesong Li, the lead author of the Blue Paper.

Since President Xi put forward the concept of new normal status in May 2014, the country is in its third year with GDP growth below 10%, so how are business people coping with the changes? CPA Australia carried out a confidence survey among Chinese business people. Chairman of CPA Australia North China committee, Jiayuan Wu, said that even though the number of interviewees foreseeing the growth rate to be 6.5% or above is less than that of last year, more chose ‘optimistic’ or ‘very optimistic’ in terms of China’s economic prospects. He also commented that although China’s GDP growth rate is slowing down, it’s still at a healthy level if compared with other countries.

The survey result demonstrates that Chinese business leaders are now understanding and adapting to the ‘new normal status’ that the country is entering; they expect the new economic environment to bring greater opportunities to those companies focusing on innovation, quality and oversea expansion. Zhanting Lin, chairman of the CPA Australia East China and Middle China committee, said interviewees consider policies that encourage innovation and intelligence-driven industry as the biggest positive effect on the economy. IT and technology industries are going to contribute the most to the GDP growth next year.

In an article in the Economist in November, Premier Keqiang Li wrote that emphasis was being put on structural reform, and two economic growth engines; service and manufacturing industries and international cooperation.

Structural reform includes transforming demand from overseas sources to domestic ones, stimulating needs from investment to consumption, shifting focus from manufacturing to service industries etc. By simplifying administrative procedures and reforming registration systems which have been traditionally very complex and time consuming, the central government is working on creating a better business environment and stimulating growth potential. Internationally, the “the Belt and Road” policy that pushes global cooperation west from China will be continued.


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