Last week, the Central Committee of the Chinese Communist Party held a series of meetings to establish the goals of the five-year plan, which will implement new, large infrastructure projects and economic reforms starting from 2016 and continuing until 2020.
These reforms aim to achieve economic objectives such as the liberalization of economic sectors, economic growth, the enactment of environmental protection laws, improvement of quality of life, etc.
It is expected that the GDP growth rate will be set at around 6.5% annually, which is 0.5% lower than the target rate for this year. The Chinese government also intends to increase private consumption among Chinese citizens to reduce the domestic economy’s dependence on exports. A lower economic growth rate would lead to a more stable economic growth.
Experts are questioning whether it is even possible to achieve a growth rate of 6.5%, considering that in this way the Chinese government acknowledges that they have underperformed and that the overall situation is not in their favor.
The slowed economic growth in China will affect the demand for energy and raw materials on a global level. It is expected that prices in global markets will decline as China is the world’s largest importer of oil, iron, grains, and many other goods and raw materials.
In the event that the growth rate is even lower, we will witness an even greater slowdown of the global economy and the possibility of a new recession in the West.
This would lead to new declines in stock prices and the strengthening of the US dollar, Japanese yen, and Swiss franc.
The euro will continue to weaken in the coming months against the US dollar as the monetary policy in the US favors the strengthening of the domestic currency against the euro, while pressure on the ECB will continue to grow in Europe.
