Growth prospects for China worsen

While various measures are being put forward to support economic activity in China, economists continue to revise their China growth forecasts downwards. The worsening outlook for the Chinese economy was also revealed in a Bloomberg survey of economists. The median 2023 China growth expectation of the economists participating in the survey fell from the previous 5.2 percent to 5.1 percent. This revision in expectations was largely due to the decline in third-quarter estimates. Economists expect 4.4 percent Chinese growth this quarter instead of 4.6 percent. The 2024 growth forecast is also far from the government's 5 percent target of 4.5 percent. Continuum Economics Director Mike Gallagher, who predicts that China will grow by 4.9 percent this year, believes that the decline in real estate investments and weak export figures played a role in the downgrade of growth forecasts. Expectations for incentives from the People's Bank of China were also reflected in the survey. Accordingly, economists expect a further 10 basis point decrease in the medium-term lending rate, which is the policy credit rate, in the last quarter of the year. China’s efforts to stimulate capital markets are also having limited impact. The CSI 300 index, which rose 5.5 percent at one point on Monday, ended the day up just 1.2 percent. According to Morgan Stanley analysts, steps such as reducing the stamp duty on stock markets for the first time since 2008 will be difficult to sustain in the long term.