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September 21, 2013

Barclays Sees China Economy Growing By Less Than 6% By 2020

Recent economic data out of China have pointed to stabilization in the world's second-largest economy, prompting a series of broker upgrades to China’s economic growth forecast for this year. But that’s as good as it’s going to get, according to some estimates.

After market hours on Tuesday, Barclays said it was cutting its 2014 projection on China’s gross domestic product to 7.1 percent from 7.4 percent.

Barclays believes that China’s potential rate of growth is already down to about 8 percent currently and may shift toward 6 percent quickly, partly due to tightening demographic constraints. The days of double-digit growth might be over, especially now that the Chinese government has neither the appetite nor much capacity to implement another big stimulus program.




Nextbigfuture GDP forecast for China

Nextbigfuture had a forecast of China's GDP which was off by about 2% for end of 2012 on yuan GDP and slightly off on exchange rate. A new forecast is accepting that China GDP growth will be in the 7% range and then drop to 4-6% in the next decade.


Year GDP(yuan) GDP growth USD/CNY 


2011     47.2   9.2        6.3     
2012     53     8.0        6.1     
2013     59     7.5        5.8    
2014     66     7.5        5.5    
2015     73     7          5.2    
2016     80     6.5        4.9    
2017     88     6.5        4.6  
2018     97     6          4.3    
2019    107     6          4.1  
2020    115     6          3.9   
2021    125     5          3.7    
2022    135     5          3.5   
2023    145     5          3.3    
2024    157     5          3.1   
2025    170     5          3     
2026    183     5          3      
2027    198     5          3  
2028    214     5          3      
2029    235     5          3     
2030    259     5          3     

There is another currency analysis service that is forecasting China to slow to 4% annual GDP growth for 2019-2025 timeframe and about 5.5% in the 2014-2018.

There are predictions that China will make the yuan a reserve currency in about 5 years and allow it to float against other currencies. This would see the yuan likely strongly appreciate against the US dollar, Euro and Yen.

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