EUR 778.00 For Business Accounts Only

Sovereign Risk Country Scorecard: China, Q4

China's economy grew by 6.7% in 2016 – its slowest rate in 26 years. While the country’s new five-year plan has set a growth target of 6.5-7% per year by 2020, the IMF predicts a slightly lower rate (between 6 and 6.5%). The official unemployment rate of 4.1% is expected to remain steady in the coming years. However, these figures are deceptively low, first because they have remained unchanged since 2010 despite a slowdown in the economy; second because of high underemployment, especially in industries with excess capacity; and third because China may make several million state workers redundant within the next few years as it shifts from an industry-based to a service-based economy and streamlines state-owned enterprises (SOEs). Indeed, restructuring of SOEs is becoming urgent as their high indebtedness poses a structural risk to the economy. Domestic credit for the long-running investment boom has led to a highly indebted economy and massive pan-sectoral industrial overcapacity, feeding speculation about a “hard landing”.​