{"id":1071,"date":"2015-10-28T08:12:36","date_gmt":"2015-10-27T21:12:36","guid":{"rendered":"http:\/\/www.bnmme.com.au\/?p=1071"},"modified":"2015-10-28T08:12:36","modified_gmt":"2015-10-27T21:12:36","slug":"china-set-to-plan-its-next-economic-heading","status":"publish","type":"post","link":"https:\/\/yinghuiinternational.com\/index.php\/2015\/10\/28\/china-set-to-plan-its-next-economic-heading\/","title":{"rendered":"China set to plan its next economic heading"},"content":{"rendered":"

\"China-resize\"<\/a>Market watchers are set to focus on Beijing this week as China\u2019s communist party elite convene for their fifth plenary session, a four day policy-setting meeting that is widely expected to chart the course for the country\u2019s economic growth from 2016 through to 2020.<\/p>\n

The plenum takes place against the backdrop of slowing economic growth and rising internal debt as well as stock market volatility. \u201cChina has challenges but the leadership seems to be well aware of the challenges. The recent financial volatility must not deter what needs to happen to build a sustainable China,\u201d Liang Du, director and co-head of Asset Allocation at Prescient Investment Management, said via email.<\/p>\n

At the same time, Matthew Birtch, a Strategic Management Lecturer at the University of Pretoria\u2019s Gordon Institute of Business Science, said the meeting is very important as it is \u201cAnother stop on the path to greater economic growth for the economy\u201d. But Martyn Davies, managing director of Emerging Markets and Africa at Deloitte Frontier Advisory, cautioned against reading too much into the discussions, \u201cThere\u2019s an over-emphasis, outside China, on the importance of the plans\u2026 The world is looking to China for guidance and they need to set a positive tone,\u201d he said.<\/p>\n

Still, investors will pay particular attention to the country\u2019s economic growth rate targets for the next five years. As part of its last five-year plan, China set out to deliver GDP growth of about 7% through to 2015. And even in the face of trying global economic conditions, the country\u2019s official growth statistics have consistently come in around the 7% mark, which has raised some eyebrows. Speaking to Mineweb from Cape Town, Davies implied it is an open secret that the growth figures that China publishes are different to its actual growth figures. In terms of economics, Birtch said there are many issues with the way in which GDP is measured and that it is likely China reports a \u2018ballpark figure\u2019.<\/p>\n

Should the country lower its growth target to below 7%, it will do so for the first time since the late 1970s. According to JP Morgan, China\u2019s commitment to doubling GDP from 2010 to 2020 requires an annual growth rate of 6.5% over the next five years.<\/p>\n

Commodity markets have already been riled over concerns of slowing growth in China, the world\u2019s second largest economy and largest consumer of raw materials, so actual lower growth targets set by the country\u2019s government are likely to further impact commodity prices.<\/p>\n

\u201cWe expect commodity demand to remain challenged by China\u2019s moves to rebalance away from construction\/investment-driven growth and toward consumption growth. This has exposed serious overcapacity in the sector, particularly in early-cycle commodities \u2013 steel, cement and coal,\u201d JP Morgan said in a note.<\/p>\n

\u201cMost people knew that this was a super-cycle and that it would end,\u201d Birtch said by telephone. According to him, some commodity-based companies made huge judgement errors by putting all their emphasis and focus on China instead of hedging themselves outside the country. But he said commodity prices will pick up as China has merely hit a plateau in terms of infrastructure growth, \u201cThere\u2019s still a huge amount of infrastructure that is needed and there are still huge rural populations that they want to urbanise\u201d. He expects this infrastructure plateau to last for a minimum of 10 to 15 years.<\/p>\n

Meanwhile Liang Du said the rebalancing of the economy will lead to the normalisation of the Chinese market and be more market driven. \u201cAlthough growth may be temporarily slower, it will result in a far more sustainable future for China as a whole,\u201d he said. Davies added that the size of China\u2019s economy is far more important than the rate at which the country grows, saying we shouldn\u2019t \u201csweat the decimal points.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Market watchers are set to focus on Beijing this week as China\u2019s communist party elite convene for their fifth plenary session, a four day policy-setting meeting that is widely expected to chart the course for the country\u2019s economic growth from 2016 through to 2020. The plenum takes place against the backdrop of slowing economic growth … Continue reading “China set to plan its next economic heading”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-1071","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p83F9T-hh","jetpack-related-posts":[{"id":1805,"url":"https:\/\/yinghuiinternational.com\/index.php\/2016\/10\/17\/global-aggregates-industry-to-grow-5-per-cent-by-2020\/","url_meta":{"origin":1071,"position":0},"title":"GLOBAL AGGREGATES INDUSTRY TO GROW 5 PER CENT BY 2020","author":"yinghui","date":"October 17, 2016","format":false,"excerpt":"The market\u2019s predicted compound annual growth rate is 5.15 per cent from 2016 to 2020. 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