2. Could you give some predictions around the growth rate of China's GDP for all of 2016, and your outlook for 2017? Is it possible that China's economy could bottom-out at the end of 2016 and then experience a rebound in 2017?
I think an economic growth rate in China of somewhere around 6.7 percent is very possible in 2016. The last three quarters' data indicate stable growth, it looks like this growth is continuing. So we think 6.7 percent is quite probable. In 2017 we expect a bit lower growth, maybe close to 6.5 percent, although this is very uncertain. One big factor of uncertainty is the world economy, which has been much weaker than we expected this year, particularly in international trade. In fact Chinese exports have been a negative component for growth in 2016. So domestic demand has compensated for the decline of net exports.
Next year it is possible that China could achieve a boost from higher exports, as there's some expectation that the world economy will pick-up. But this is very uncertain. We have also seen a rise of protectionism in many countries that could also impact China's exports. It could be that China will achieve more growth in exports next year, but it is also possible that it won't. Another important component of growth in 2016 is real estate, which grew at 8.9 percent over first three quarters of the year. We know from international experience that a very rapid growth in real estate like this combined with very rapid price increases is usually unsustainable and volatile. The government is aware of that, which is why measures have been taken to cool down the housing market. We agree with those measures and think they are appropriate. For this reason, however, growth in real estate in 2017 will likely be slower.
Another question relates to infrastructure and public investment, which was an important component of growth in 2016. I'm sure that it will also be important in 2017, but there is also the question of credit growth. Rapid credit growth is increasing macro-economic risks that need to be addressed. So it would be a positive step to prioritize a slowdown of credit growth, even though it may mean a bit less growth in investment and the economy in the short run.
So those are the reasons why we think GDP growth might be a bit lower in 2017, but 6.7 percent is still very high given what the world economy is going through now. So we believe China could continue to achieve strong growth next year, even if a little slower than in 2016, while making progress in reform and bringing credit growth under control. In our view, this would make 2017 a very successful year for China.
3. The World Economic Outlook 2016 issued by the IMF calls for countries all over the world to use coordinated cooperation and effective policy levers to boost growth prospects; what are your views on using these two tools properly?
The world economy's growth has become very slow, much slower than expected, and faces a dilemma. The world economy has been stimulating growth primarily through monetary policy and lower interest rates. Now we're reaching a point where interest rates are approaching zero, there is increasingly little room left to use that kind of instrument to boost growth. Therefore, for governments to be effective in stimulating growth, they need to rely more on fiscal policy, like tax reductions or increases in public spending. Many people now believe that a major infrastructure program in the post-election United States could feed this growth. But we also know from world experience, including that of the EU, that fiscal policies should be coordinated for the world economy to move together in a harmonized manner.
International trade and investment are other questions. More cooperation in these areas could also have a strong positive impact on growth.
