Workers load export cargo onto cranes at a port in Lianyungang, Jiangsu Province, China, June 7, 2019.
BEIJING – International investment firms have changed their forecasts for China’s GDP almost every month this year, with JPMorgan making six adjustments since January.
That’s according to a CNBC analysis of company reports. JPMorgan did not immediately respond to a request for comment.
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US investment banks recently cut their July GDP forecast to 5% from 5.5% previously.
Meanwhile, Citigroup and Morgan Stanley also cut rates to 5% this month.
The average forecast of the six companies studied by CNBC is now at 5.1%, close to the target of “around 5%” announced by Beijing in March.
Citi’s latest forecast marks the firm’s fourth adjustment this year. Morgan Stanley has adjusted its forecast just once since it was set in January.
During the same period, Nomura adjusted its forecast four times, UBS adjusted its forecast three times, and Goldman Sachs adjusted its forecast twice.
Investment banks mostly raised their forecasts early this year after China’s economy initially rebounded after three years of strict COVID-19 containment.
The latest rate cut comes at a time when recent economic data has shown weaker-than-expected growth and with little inclination from the authorities to unleash large-scale stimulus. Gross domestic product grew 6.3 percent in the second quarter from a year earlier, below the 7.3 percent forecast by analysts polled by Reuters.
However, Rhodium Group’s Logan Wright and his team said the disappointing second-quarter GDP growth was due to official revisions to China’s quarter-on-quarter growth last year.
The resulting low numbers help Beijing justify supporting the economy, analysts said in a July 17 note. “Know what you’re seeing in this year’s GDP numbers: These are artificially constructed narratives for different audiences, not a report on China’s economic performance.”
The ONS did not immediately respond to CNBC’s request for comment.
Instead of releasing multiple readings, the bureau discloses quarterly GDP relatively soon after the period ends and then releases revised figures.
The Bureau of Statistics also issued a public statement on punishing local governments for falsifying data. The accuracy of China’s official figures has long been questioned.
Goldman Sachs noted a seasonal revision on Friday, but maintained its forecast for Chinese growth of 5.4%. “Looking online, we don’t think these surprises will be long enough to last or warrant a major adjustment to our China growth forecast for this year.”
Researchers have been looking for alternatives to measure growth.
One such organization is the US-based China Beige Book, which claims to conduct regular surveys of Chinese companies to publish reports on the economic environment.
Shehzad Qazi, managing director of China Beige Book in New York, said the company’s data earlier this year “showed no wave of retaliatory spending or an exaggerated recovery”.
“Wall Street’s predictions of massive growth in China were initially based on hype and then pushed by China’s inflated GDP figures through early 2023.”
Qazi testified this month before the U.S. House Select Committee on the Chinese Communist Party.
Investment Banking Research is often referred to as “Seller” Because its purpose is to let buyers know about financial products and company stocks.
As far as China is concerned, Qazi noted that “not only are investment banks willing to sell ‘China is booming’ stories, but given their business interests in China, they are also reluctant to express any views that might be seen as critical of the Chinese economy.”
The World Bank and the International Monetary Fund also regularly publish economic forecasts for China and other countries. However, their reporting schedule means that the forecast may not exactly match the current economic situation.
In June, the World Bank raised its forecast for China’s economic growth this year to 5.6 percent from 4.3 percent previously.
The International Monetary Fund raised its forecast for China’s GDP growth to 5.2% in April from 4.4% previously. This month, its spokesman noted that China’s economic growth was slowing and said “updated forecasts” would be reflected in the IMF’s next World Economic Outlook.
Chinese officials have stressed over the past few weeks that the country It is expected to achieve the annual growth target of around 5%.
Of the six investment firms surveyed by CNBC, the highest Chinese GDP forecast so far this year is JPMorgan’s 6.4% – the bank’s second revision in April alone.
Overall, the company’s forecast range spanned 1.4 percentage points, the most in CNBC’s analysis.
While businesses and investors expressed uncertainty about China’s near-term economic trajectory, analysts expect growth in the world’s second-largest economy to accelerate in the longer term.
“Overall, even without any meaningful policy support in the second half of 2023, China’s economy is likely to see a cyclical rebound in early 2024,” Rhodium Consulting analysts said.
Taking into account the four quarters, a steady recovery in household consumption should help boost employment in services, while industrial inventories may need to be restocked in the future, they said.