China’s economy, already in the midst of a half-decade deceleration, won’t arrest its downward trajectory until at least 2018.
Six of 12 economists surveyed by Bloomberg last week say 2018 will be the turnaround year, while five said it will take until 2019 or after for growth to re-accelerate. The outlook underscores the challenge facing President Xi Jinping as he aims for gross domestic product gains averaging at least 6.5 percent per year for the next five years so he can deliver on his goal of doubling 2010 income and GDP levels.
Policy makers are in a bind. Efforts to reform the supply side of the economy by eliminating overcapacity and improving the quality of expansion are key to long-term prospects, yet policies to fix the mess may weigh on the short-term outlook. That leaves the need for stimulus that risks adding to a debt pile already hanging over the world’s second-largest economy.