China’s Economy and Policy: Trends and Outlook in Early 2016

Headline

China will tighten capital controls, and will need to work with institutions like EBRD, EIB and IFC to achieve its New Silk Road goals but MFIs must remind China of the need to adhere to free market and CSR principles.

Abstract

China recorded the lowest GDP of 6.9% for 25 years in 2015; given historically high levels of debt and excess housing and factory capacity, growth going forward will stagnate. In 2015, China became a net outbound investor for the first time. The trend of rising outbound FDI will continue as China seeks higher than domestic returns and access to new markets, incl. for geopolitical reasons.