How bad will China's economy be at worst?According to a research report released by the Japan Center for Economic Research, if China's real estate market triggers a financial crisis, its economy will remain at a low growth rate of about 1% for a long time according to the real growth rate that includes price fluctuations, so that it will be extremely difficult to achieve the long-term goal of doubling nominal gross domestic product (GDP) by 2035.
According to the "Nikkei Chinese Network" quoted by the Japan Economic Research Center in December every year in December 18 countries and regions in the Asia-Pacific region economic growth outlook research report shows that China's real estate has been in a downturn for more than two years, ** plans to strengthen financial support for real estate enterprises, but this measure may cause too much burden on the financial system. If the response is not done properly, it may lead to a sluggish housing sales and a sharp increase in the bad debts of banks' real estate loans, as well as a crisis in which the operating risks of small and medium-sized banks will expand.
According to the report, the Japan Center for Economic Research has estimated the economic outlook for China's financial crisis by viewing the bursting of the real estate bubble as a risk scenario that is unlikely but likely to occur. First of all, assuming that the financial crisis breaks out in 2027, capital outflows will accelerate due to the sharp decline in infrastructure and other investments due to the priority debt repayment of **, which is currently at 7 per dollarThe exchange rate of 1 yuan may depreciate to 1 US dollar to 9 yuan.
In this scenario, China will fall to de facto zero growth in 2027. Under the standard scenario, the real growth rate in 2027 is 32%, and after 2029, after the crisis, it will be less than 1A low growth rate of 5% and a slower economic growth rate than the United States will also be perpetuated.
If China's economy slows, growth in other countries will also slow, with 17 countries and regions excluding China growing at a rate 0.0 percent lower than the standard scenario in 2027, the report said7~0.9 percentage points.
As for China's long-term economic growth goal of doubling its nominal GDP by 2035 and raising its per capita GDP to the level of a moderately developed country, it is generally believed that the standard for a moderately developed country is about $20,000 in nominal GDP per capita.
According to the study, if there is a financial crisis in China, nominal GDP in 2035 will be 1Nine times, GDP per capita (in US dollars) will remain at around $15,000. In order to achieve the goal under the standard scenario, the main key is to eliminate the financial risks arising from real estate and local finances. However, even under normal conditions in which China does not experience a major economic crisis, its real growth rate will continue to slow. It is estimated to fall to 3% by 2029 and below 2% by 2035.
The Japan Center for Economic Research also estimated the scenario for China to moderate the economic slowdown by promoting reforms, including prioritizing non-performing loans and curbing financial risksIn terms of the business environment, systems that are considered to be opaque, such as the newly revised Counter-Espionage Law, should be corrected;In terms of **, friction with the United States should be eased. Through these measures, we will accelerate the digital transformation and maintain the improvement of productivity.
As a result, the real growth rate will remain at 25%。However, nominal GDP at the same time was only 80% of that of the United States, and even if reform progress is made, it will not be possible to achieve a reversal between China and the United States, because the prolongation of the real estate slump will be a major obstacle to economic growth.
In addition, the study also notes that India may perform better in terms of economic scale, and it is estimated that it will maintain a real growth rate of around 6%, and GDP is expected to surpass that of Japan by 2028. If we refer to the latest world economic outlook released by the International Monetary Fund** (IMF) in October, India will become the world's third-largest economy by 2028.