Dec 17 – China is no longer a driver of commodity demand, rather it has become a constant factor that can be relied upon to import relatively steady volumes of major natural resources.
Both China’s central bank and a respected think-tank expect further moderation in the economic growth rate next year, which underscores that the world’s second-largest economy is still undergoing a structural transformation, but is unlikely to fall victim to a hard landing.
The People’s Bank of China said in a paper published on Wednesday that annual growth will slow to 6.8 percent in 2016, from an estimated 6.9 percent this year.
This forecast followed a similar estimate from the Chinese Academy of Social Sciences, which said the economy may expand between 6.6 percent and 6.8 percent because of weak external demand and slowing domestic investment.
The central bank said it expects fixed asset investment, an important driver of commodity demand, to rise 10.8 percent in 2016 from this year.
While that sounds positive for commodity demand, the bank also said that “downward pressures on growth will persist for a while due to overcapacity, profit deceleration, and rising non-performing loans”.
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