Gov't will focus on reform, deleveraging: analysts
The Chinese economy is expected to remain stable next year, as both domestic and global conditions have improved, and the government is likely to focus on implementing reforms at State-owned enterprises (SOEs), cutting leverage and regulating the financial industry, analysts from two rating agencies said on Tuesday.
"2018 is actually going to be a relatively dull year for the Chinese economy. We won't see any special new stimulus factors and we won't see major risks," Mao Zhenhua, founder of China Chengxin Group, told a conference in Beijing.
The conference was hosted by US ratings agency Moody's Investors Service and its Chinese counterpart China Chengxin International Rating Co, and it focused on China's credit outlook for 2018.
In a keynote speech, Mao said the Chinese economy is likely to remain stable without any major downward shift, citing improving signs in both external and internal demand.
"We believe that [China's GDP growth] will be between 6.8 percent and 6.9 percent [this year]. We estimate next year it should be around this level too," he said.
Moody's also said on Tuesday that the outlook for Chinese financial institutions is stable through 2018, citing strengthening government regulation and stable economic growth, according to a statement the agency sent to the Global Times.
"The government will remain keen on adopting coordinated policy measures to curb shadow banking and interbank activities and to address key imbalances in the financial system," Sherry Zhang, a Moody's analyst, was quoted as saying in the statement.
"As for the operating environment, steadying economic growth and recovering commodity prices will support corporate profitability and therefore the asset quality of the financial institutions," Zhang noted.
At the conference on Tuesday, Nicholas Zhu, a Moody's senior analyst, said that the sector's stable outlook is further supported by a steady operating environment.
"We have stable outlooks for all the key areas of the operating environment," Zhu said, "but we see liquidity and profitability as deteriorating."
Some uncertainties remain, such as how the Chinese government will balance stabilizing economic growth and containing systemic financial risks. Cutting leverage and strengthening regulation are both set to be key policy trends following the 19th National Congress of the Communist Party of China, analysts said.
"It currently remains unclear whether the increased centralization of authority will result in an acceleration of the pace of reform or a continuation of the gradual implementation of economic liberalization, which balances other policy objectives, such as maintaining relatively strong growth and the strong role of SOEs," Michael Taylor, Moody's chief credit officer, told the conference.
Declining fixed-assets investment and mounting local government debt could also continue to pose risks for the Chinese economy in 2018, analysts said.