A Press Conference on “China Economic Forecast for 2015” organized by Center for Forecasting Science (CEFS) , Chinese Academy of Sciences (CAS) is held at the conference hall of Academy of Mathematics and Systems Science, CAS on January 23, 2015.

A Press Conference on “China Economic Forecast for 2015”(Photo: Shen Yang/GMW.cn)

At the Press Conference, CEFS released its annual forecasts on China’s GDP growth rate, CPI, investment, consumption, export and import, agricultural production, development of main industries, real estate prices, logistics industry development，global bulk commodities prices and water demand by sector for 2015. The main forecasting results are as follows.

China’s economic growth is steady in 2015, and the year-on-year growth rate of China’s GDP is predicted to be around 7.2 percent in 2015, which is 0.2 percentage point lower than that of 2014. The growth rate of the primary industry is projected to be 3.9 percent, the secondary industry 7.1 percent and the tertiary industry 8.0 percent, respectively. The consumption, investment and net exports will contribute 3.9, 3.1 and 0.2 percentage points to China’s GDP growth rate respectively. China’s economic growth will present a low to high tendency during the whole year of 2015. In the first and the second half year of 2015, China’s GDP growth rate will be around 7.1 percent and 7.3 percent respectively.

China's economic growth will go down further and the aggregate domestic demand will decline too in 2015, but the force pushing up CPI is stronger than the force pulling it down. The CPI for 2015 is expected to rise moderately, its growth rate will be about 1.8%,slightly less than that for 2014. The movement in the CPI in 2015 will be relatively smooth. PPI and PPIRM in 2015 will both decrease about 1.9%, at the nearly same level of that in 2014. This is mainly due to the pressure of reducing inventory of over-capacity industries and downward pressure of international commodity price. The trends of PPI and PPIRM in 2015 will go downward in the first half year and go upward gradually in the second half year.

The nominal growth rate of the total retail sales of consumer goods will be around 11% in 2015, at the lower level in the recent 10 years. The growth rate of investment in fixed assets will be around 14.9% in 2015, lower than that of 2014. China’s accumulative growth rate of investment in fixed assets will fluctuate

China’s export and import value is expected to keep steady increase in 2015, with the growth rate of around 6.4% for export and 5.4% for import, leaving the country with an increased trade surplus which is more than that of 2014. A rapid growth of export and import between China to the United States and European Union is expected. The growth rate of China’s export to the United States is up around 6.5% in 2015, and that for import from United States is expected to around 5.8% in 2015. The export and import from China to European Union are expected to rise by 8.0% and 6.3% respectively in 2015. Growth rates of mechanical and electrical products and high-tech products will maintain steady. The growth rates of mechanical and electrical products are 6.3% and 5.8% for export and import respectively. The growth rates of high-tech products are around 6.8% and 6.9% for export and import respectively. Labor-intensive products will increase slightly in 2015. Growth rates of clothing, textiles and footwear in 2015 are predicted to be around 7.3%, 6.4% and 7.8% respectively.

China’s grain sown area is expected to increase slightly in 2015 reaching 113.3 million hectares, which is 560 thousand hectares more than that in 2014. On the condition that there is no extreme weather, the grain output will rise by 4 million tons or up 0.7% over 2014. However, if severe weather occurs in the late summer and/or autumn of 2015 in major grain production areas, the autumn grain output may decrease and further cause the decline of national grain output. The cotton acreage in 2015 will continue to drop; the oil-bearing crops will slightly increase in terms of the sown area in 2015, while the yield will increase if no extreme weather occurs during the growing period.

For steel industry, considering the slowdown of China’s economic growth guided by the “new normal” theory and the long-term overcapacity of steel industry, it is expected that the steel industry will maintain a low growth at the first half of 2015. However, with vigorous implementation of the policy of regulating production capacity, the production capacity of steel will be further controlled. Steel industry is expected to recover gradually in the latter half of 2015. Econometric models predicted that in 2015, crude steel production will reach 843 million tons, an increase of 3.69% over 2014; steel production will be approximately 1.150 billion tons, an increase of 3.14% over 2014. The coal industry will also face greater market pressures in 2015. It is predicted that China’s coal production in 2015 will reach 3.593 to 3.611 billion tons, a decrease of 0.83% over 2014. It is expected that the automobile industry will continue to downturn slightly in 2015. Econometric model predicts that China’s automobile production and sales will reach approximately 25.35 million and 25.06 million respectively in 2015, an increase by 6.8% and 6.6% over 2014.

It is expected that the average national house prices will be around RMB 6400 per square meter in 2015, up 1.2% from the same period last year. The average national house prices in the first-tier cities will be around RMB 20100 per square meter in 2015, up 6.5% from the same period last year. It is expected that the average national house prices will increase 1.8% year-on-year in the first quarter of 2015, 2.2% in the first two quarters of 2015, 3.0% in the first three of 2015, 1.2% by the end of 2015. In addition to an increasing demand, the sale area and amount of commercial houses sales is expected to increase. The growth rate of real estate investment in 2015 is expected to a slight increase compared to 2014, with a year-on-year rise in the investment for land purchase. The growth rate of the new construction area and the completion area in 2015 is expected to keep rising.

The average of logistics prosperity index (LPI) is expected to be around 54.7% in 2015. Total value added of logistics industry will reach RMB 3.24 trillion in 2015, increasing by 8% over 2014 at the comparable prices. The growth rate will be lower than that of 2014. Social logistics demand and the market will continue to expand. Total value of social logistics of 2015 is expected to be around RMB 229.8 trillion, up 8% over 2014. Social logistics efficiency will be gradually improved, while total social logistic cost is expected to reach RMB 10.4 trillion, up 9% over 2014.

With an assumption that world economic recovery is weak and US dollar appreciates, we expect world commodity prices to drop significantly in 2015. The Reuters/Jefferies CRB (RJ/CRB) Index will fall to 272 in 2015, down 6% from the average in 2014. And WTI crude oil futures price is expected to fluctuate between 40 and 85 U.S. dollars per barrel in 2015, and the average price will drop to 72 U.S. dollars per barrel, down 23 percent from the average in 2014. The dramatic surge in US shale oil production will lead to abundant supply of global oil market.Together with the weak global economy and appreciation of U.S.dollars, these factors will depress the oil price.

In 2015, the total water demand is expected to be about 627.59 billion m3 in China, will increase 0.71% from 2014. Agricultural water demand is about 395.79 billion m3, accounting for 63.1 percent of the total water demand, which is the largest part of water demand. Water demand for production (industrial water demand) will slightly increase, the volume is about 141.86 billion m3, accounting for 22.6 percent of the total water demand. Domestic water demand is increased steadily, which is about 79.14 billion m3, accounting for 12.6 percent of the total water demand. Ecological water demand is about 10.8 billion m3, accounting for 1.7 percent of the total water demand.

In addition to the above forecasts, the CEFS also releases China port container through put forecast, urban and rural household income forecast etc. Reports can be found at "China Economic Forecast and Outlook for 2015" published by Science Press, Jan. 2015.

Contributed by Shen Yang