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3.2.3 Forecasts of Growth Rates of Other Major Macroeconomic Indicators Export, Import, and Reserve Growth

The CQMM predicts that in 2015, the speedy relief of the US economic recovery and eurozone economic crisis will promote China's imports and exports to a certain extent. In 2015, based on the present price levels, China's total exports are expected to grow by 8.02, 1.94 % higher than that of 2014. The country's import growth will rise to 7.57 %, a significant increase of 7 % from 2014 (see Table 3.1). By quarters, China's year-on-year export growth in the first and second quarters of 2015 soars, respectively, to 11.49 % and 11.41 % from the previous year, falls slightly in the third quarter to 8.12 %, and reaches 9.62 % in the fourth quarter. The year-on-year growth in imports in the first quarter of 2015 could reach 4.89 %, rebound quarter by quarter, and rise to 10.45 % in the fourth quarter. Because of the increase in export growth rate, China's foreign exchange reserves could grow by 4.05 % in 2015. In 2016, following recovery of the external market demand, China's imports and exports will continue to grow steadily. At the current USD prices, the export growth rate is expected to reach 7.75 % and import growth rate expected to reach

6.11 %. China's foreign exchange reserves may grow by 3.09 % in 2016 (Table 3.1, Fig. 3.6). The Growth Rate of Total Fixed Capital

The CQMM predicts that in 2015 (Fig. 3.7), on account of the weak real estate market and undigested excess production capacity and based on current prices, the urban fixed asset investment growth rate will be 10.65, 4.57 % lower than that in 2014. In 2016, following the recovery in manufacturing and a new round of urbanization, the demand for urban investment will increase further and the growth rate of urban fixed asset investment will rebound to 12.96 %. By quarters, the growth rate of urban fixed asset investment (present price) will slightly fall to 8.34 % in the first quarter of 2015 but gradually rise to 12.08 % by the fourth quarter. In 2016, except for the second quarter, it will be maintained at more than 13 %.

Fig. 3.6 The growth rate of reserves (year-on-year basis)

Fig. 3.7 The growth rate of total fixed capital formation (year-on-year basis) (Note: FI_UR denotes the growth rate of urban fixed capital formation at current prices) The Growth Rate of Consumption

According to the CQMM prediction, in 2015, with the prices kept constant, the total consumption of residents will grow by 7.06 %, a decrease of 0.21 % from 2014; it would then rise slightly to 7.26 % in 2016 and maintain stability. In 2015, at the present price level, the total retail sales of social consumer goods will grow by

11.80 %, a decrease of 0.32 % from 2014, and rise slightly to 13.28 % in 2016.

By quarters, the growth rate of total residents' consumption (at constant prices) will peak to 8.60 % in the first quarter of 2015, then fall back quarter by quarter, and finally reach 5.86 % by the fourth quarter. In 2016, it will basically remain

Fig. 3.8 The growth rate of consumption (year-on-year basis) (Note: CON_D_C denotes the growth rate of resident consumption at constant price and Retail denotes the growth rate of retail consumer goods sales at current prices)

stable and reach the annual peak of 8.60 % by the second quarter and then fall back to 7.16 % by the fourth quarter. The growth of total retail sales of social consumer goods (present price) will improve every quarter of 2015, and driven by base effects of the previous year's fourth quarter, it will rise to 16.37 %. In 2016, the increase will be relatively stable and will remain between 13.1 and 13.4 % each quarter (Fig. 3.8).

In conclusion, we present the CQMM predictions as follows:

1. In 2015, it is the final year of the 12th five-year plan and the year the Chinese economy moves toward the new normal, the real estate market will continue to adjust, real estate investment and manufacturing will remain at the low end, and infrastructure investment will continue to play the role of palm of steady growth. Simultaneously, a transformation between the old and new mechanisms on account of various promotional reforms will produce a certain degree of uncertainty in economic growth. The expected economic growth rate of China in 2015 is 7.14 %, a slight decrease of 0.23 % from 2014, and the country's CPI is expected to rise by 1.74 %. If the economic growth rate stays over 7 % and the employment situation is basically stable, it will create favorable conditions for the Chinese government to achieve the goal of the 12th five-year plan and enter a new stage of development and to speed up the implementation of its comprehensively deepening reforms.

2. In 2015, it is the key year to comprehensively deepen China's reforms. Carrying out comprehensively deepening reform measures will optimize the allocation of resources, recycle the potential of economic growth, and stimulate the vitality of economic development. By accelerating the administrative examination and approval system reform, finance and tax reform, and financial reform and formulating the industry and regional planning policies intensively, the system will release further bonuses. The promotion of China's (Shanghai) reform experience of free trade area can be copied, and the government's widely implemented negative listing management technique will further widen the space of private investment, improve the proportion of private investment, improve the quality and efficiency of economic growth, gradually enlarge the residents' income and consumption, and promote the economic growth transformation mode. The GDP growth rate is expected to increase by about 0.06 % in 2016 over the previous year.

3. In 2015, the eurozone will continue its weak economic growth, but the strong recovery of the US economy might promote the steady rise of China's imports and exports. Furthermore, at current prices, the total exports of China are expected to grow by 8.02 %, an increase of 1.94 % over the previous year. The growth rate of China's total imports could rise to 7.57 %, a significant increase by 7 % over the previous year, and, consequently, its trade surplus could further narrow down.

4. Following the decline in economic growth, all kinds of hidden risks would tend toward innovation, all kinds of risks that resolve high leverage and bubbles into the main characteristics will continue for a period of time, real estate investment will become weak, and the pressure of the manufacturing industry's liquidation could inhibit the growth of investment in fixed assets. However, with China's “One Belt and One Road” policy, its new strategy for urbanization, construction, and the rapid development of the equipment manufacturing industry, emerging areas such as high-tech industry will continue to promote the fast growth of investment in fixed assets. The expected growth of urban fixed asset investment in 2015 is 10.65 %, at current prices, down 4.57 % from the previous year. At the same time, the comprehensively deepening reforms in investment, trade, finance, services, state-owned enterprises, and so on, especially the system mechanism innovation, will also open up new investment options and attract social capital to participate in investment. The growth rate of urban fixed asset investment is expected to rise to 12.96 % in 2016.

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