China GDP growth about 7.5% this year and slowing to 6% range the next few years

Nomura Securities raised its GDP target to 7.5% from 7.4%. It’s not a major jump, but it is a move in the right direction. China investors have been waiting for any sign of momentum since 2012.

“We do not believe a recovery is sustainable in the medium term and continue to expect growth to slow to 6.8% in 2015,” wrote Zhiwei Zhang, Nomura’s senior economist in Hong Kong. Zhang cited inflation going up to 3.2% next year, limiting the scope of any future policy easing.

Meanwhile, the current property sector slowdown is structural due to over investment, said Zhang. The property market is the top risk, but a correction has started and this will likely be exacerbated in 2015 as the over-supply problem in second and third tier cities may worsen.

Below is my new long term prediction for China's economy. It is a slightly less than what I thought 6 months ago and mainly I changed the projection on the currency exchange. I think China will only slowly increase the strength of its currency.

Year GDP(yuan) GDP growth USD/CNY 


2011     47.2   9.2        6.3     
2012     53     8.0        6.2     
2013     59     7.6        6.05    
2014     66     7.5        6.1    
2015     72     6.8        5.8   
2016     79     6.5        5.6    
2017     87     6.5        5.4  
2018     95     6          5.3    
2019    105     6          5.2  
2020    113     6          5.0   
2021    123     5          4.9    
2022    133     5          4.8   
2023    142     5          4.7    
2024    154     5          4.6   
2025    167     5          4.5     
2026    180     5          4.4      
2027    195     5          4.3
2028    210     5          4.2     
2029    230     5          4.1   
2030    255     5          4.0   

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