China Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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China Country Risk Report
Product Price
$1,195.00

Core Views

  • We expect real GDP growth to continue to slow in 2016, and forecast it to fall to 6.3%, versus 6.9% in 2015. As the economy continues to work through its significant overcapacity issues, job losses in sectors ranging from coal mining to steel production could be significant. Meanwhile, trade accounts will continue to underperform versus previous years, with both exports and imports set to contract for a second straight year.

  • Xi Jinping has largely consolidated his leadership position, and we believe that he is firmly in control of the Communist Party. This means that policy-making will remain highly centralised and generally cohesive over the medium term. While there remain divides on how to manage the economy, we believe that an increased emphasis will be placed on monetary stimulus as growth continues to slow. That said, targeted fiscal measures are also likely as the pace of the slowdown has likely surprised Beijing to the downside . The level of acceptance from the government regarding the re-allocation of labour from industries with significant overcapacity issues will be particularly crucial.

Major Forecast Changes

  • The PBoC will eventually be forced to relent in its support for the embattled Chinese yuan, and we retain a bearish outlook on the currency. Amid increasing downside pressures, we are downgrading our 2016 CNY forecast to CNY7.1000/USD, versus CNY6.8000/USD previously.

Key Risks

  • The PBoC's continued support of the Chinese yuan is contrary to its monetary easing operations aimed at shoring up economic activity, and we expect the central bank to relent on the former. However, there exists the possibility that monetary conditions become more acute over the course of 2016, which, in tandem with the economy's extensive debt overhang, could lead to a rapid rise in bad debts, cascading defaults, and a significant downturn in economic growth.

Macroeconomic Forecasts (China 2014-2017)
Indicator 2014e 2015e 2016f 2017f
National Sources/BMI
Real GDP growth, % y-o-y 7.3 6.9 6.3 5.9
Nominal GDP, USDbn 10,380.2 11,044.0 11,054.6 11,337.5
Consumer price inflation, % y-o-y, eop 1.5 1.6 2.0 2.5
Exchange rate CNY/USD, eop 6.21 6.49 7.10 7.25
Budget balance, % of GDP -2.1 -2.4 -2.4 -2.4
Current account balance, % of GDP 1.6 2.7 2.8 2.7
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
On The Brink: Five Scenarios For Growth
8
GDP By Expenditure Outlook
11
TABLE: GDP GROWTH FORECASTS
11
TABLE : PRIVATE CONSUMPTION FORECASTS
11
TABLE: GOVERNMENT CONSUMPTION FORECASTS
11
TABLE: FIXED INVESTMENT FORECASTS
12
TABLE: NET EXPORTS FORECASTS
12
Fiscal Policy
12
Jing-Jin-Ji Integration Set To Benefit The Region, Though Risks Remain
12
Structural Fiscal Position
14
External Trade And Investment Outlook
15
Downside Risks Deepen As Imports Plummet
15
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
15
Outlook On External Position
17
TABLE : CAPITAL & FINANCIAL ACCOUNT BALANCE
17
TABLE: MAIN EXPORT & IMPORT PARTNERS
18
TABLE: MAIN EXPORTS & IMPORTS
18
Monetary Policy
18
RRR Cut Points Towards Further Yuan Weakness
18
Monetary Policy Framework
20
Chapter 2: 10-Year Forecast
21
The Chinese Economy To 2025
21
TABLE: LONG-TERM MACROECONOMIC FORECASTS
21
Chapter 3: Political Outlook
25
SWOT Analysis
25
BMI Political Risk Index
25
Domestic Politics
26
Beijing's Effectiveness Largely Depends On Local 'Iron Triangle'
26
TABLE: POLITICAL OVERVIEW
26
Long-Term Political Outlook
29
Major Challenges Over The Coming Decades
29
Chapter 4: Operational Risk
33
SWOT Analysis
33
Operational Risk Index
33
Operational Risk
34
TABLE: OPERATIONAL RISK
34
Trade Procedures And Governance
35
TABLE: EXPORT AND IMPORT DOCUMENTS
35
TABLE: TRADE PROCEDURES BREAKDOWN
35
TABLE : ASIA - TRADE PROCEDURES AND GOVERNANCE RISK
36
Vulnerability To Crime
37
Chapter 5: BMI Global Macro Outlook
41
Global Macro Outlook
41
Tail Risks Mounting Amid Sub-Par Growth
41
TABLE: GLOBAL ASSUMPTIONS
41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
42
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, 2015 AND 2016 (%)
42
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
43
TABLE: MACROECONOMIC DATA & FORECASTS
45

Assess your risk exposure in China with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in China with confidence.

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