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 The world's second-largest economy still faces downward pressure and
the impact of fiscal and monetary policies that were rolled out this
year will be evident by the first half of 2016, the central bank
said in the research report.
"Although downward pressures on growth will persist for a while due
to overcapacity, profit deceleration, and rising non-performing
loans, we expect that the number of positive factors will gradually
increase in 2016," it said.
Recent appreciation in the yuan's real effective exchange rate (REER)
has put pressure on China's exports, the central bank report said,
adding that keeping the yuan's trade-weighted exchange rate
relatively stable could help exports.
Meanwhile, the Chinese Academy of Social Sciences (CASS), a top
government think tank, predicted in its "blue book" the economy
could expand at a slower pace between 6.6 percent and 6.8 percent in
2016 due to weak external demand and cooling domestic investment.
The think tank recommended that China should widen its fiscal
deficit to 2.12 trillion yuan ($327.6 billion) next year from a
planned 1.62 trillion yuan in 2015, keeping the deficit to GDP ratio
within the warning level of 3 percent.
"It's quite necessary for China to increase strength on its fiscal
policy as the economy faces downward and deflation pressure," said
Li Xuesong, an economist at CASS, told a media conference.
China's Vice Finance Minister Zhu Guangyao said last month that
economists the world over should reconsider what constitutes a
danger zone for deficit-to-GDP ratios, in comments that some
analysts took as a hint of more aggressive stimulus to come.
The government has embarked on its most aggressive policy easing
since the depths of the global financial crisis, including six
interest rate cuts since November 2014, in a bid to hit its economic
growth target of around 7 percent this year.
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The central bank expects China's fixed-asset investment, a key
driver of the economy, to grow 10.8 percent in 2016 from this year,
as property investment gradually stablises, according to the report
written by Ma Jun, the bank's chief economist, and other central
bank economists.
China's retail sales, a key gauge of domestic consumption, could
grow an annual 11.1 percent next year, it said.
China's exports are expected to rise an annual 3.1 percent in 2016
while imports are forcast to grow 2.3 percent, the PBOC said in its
projections.
China's annual consumer inflation may quicken to 1.7 percent in 2016
from an expected 1.5 percent this year. The producer price index is
forecast to fall 1.8 percent in 2016, moderating from an expected
5.2 percent drop in 2015.
(Reporting by China Monitoring Desk, Xiaoyi Shao and Kevin Yao;
Editing by Jacqueline Wong)
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