The Chinese Academy of Social Sciences sees economic growth in China of 6.8% for the second quarter, and a good chance of the country meeting its full year growth target of 6.5%.
The CASS forecast for Q2 growth is in alignment with the Q2 and H2 expectations of other domestic institutions.
According to CASS domestic consumer prices will rise by 1.4% in Q2, while scale industries will grow 6.7%, as compared to 6.8% in the first quarter.
Guo Kesha, chairman of CASS’s economic policy research centre, said that from a long-term perspective China is entering an L-shaped recovery, and that economic growth is unlikely to falter significantly in future.
CASS sees acceleration in industrial production, the ongoing emergence of new growth drivers, as well as increases in fixed asset investment, real estate investment and private investment as all providing robust tailwinds for China’s economy at present, and expects full year growth of roughly 6.7%.
In the second half CASS expects industry to enjoy moderate growth as well as steady growth in consumption, yet a slight decline in investment growth and little chance of improvements to exports.
The real estate sector remains an uncertain factor for economic growth in the near-term, however, because of the strict purchase and lending restrictions imposed on hotspot cities since September 2016 with the goal of deflating any property bubbles.
Real estate sales growth has fallen off markedly despite ongoing growth in investment. During the January – May period nationwide real estate development investment posted a nominal YoY gain of 8.8% to reach 3.7595 trillion yuan, which is roughly in line with growth of 8.9% for the January-February period.
During the January-May period commercial housing sales saw YoY growth of 14.3% in area, however, for an over 10 percentage point drop compared to YoY growth of 25.1% for January-February.
Guo Kesha points out there remains significant uncertainty with respect to real estate investment, and some likelihood of a sharp drop in growth similar to that which hit the sector in 2015, when full year real estate investment growth was only 1%.
While services sector continues to enjoy very rapid growth, real estate and finance remain far bigger drivers of the economy.
“The combined share of China’s finance and real estate sectors in total added value is near 15%, a percentage which exceeds that of the US and Japan,” said Guo.