You’re too bearish on China growth – by Frik Els ( – December 22, 2015)

China’s leaders in October outlined the direction of the world’s second largest economy over the next five years.

The country’s 13th five-year plan running from 2016 – 2020 is the first one approved by Xi Jinping who led a group on “comprehensively deepening reforms” to overhaul China’s investment-led economy into one driven by services and consumption.

The communique issued in October provides only the basic frameworks of programs and policies with a more detailed plan to be made public in March. But it gave some indication that Xi and company, unnerved by slowing economic growth, decided to put their money again on investment to re-energize the sagging economy.

Beijing’s decision to let urbanization happen at a faster pace and to stick to its target of “medium-high economic growth”and to double-down on a long-stated commitment to “double 2010 GDP by 2020” gave weight to the argument that the leadership would not balk at adding stimulus to kick-start the world’s second largest economy.

And the 2020 GDP goal would require annual growth rates of 6.5% to go from a nominal $10 trillion last year to over $12 trillion in 2020. That’s the equivalent of adding an economy the size of Switzerland’s every year.

A new survey by McKinsey & Company released on Tuesday asked executives around the globe about their expectations for near- and longer-term growth in China compared to Beijing’s goals.

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