Nomura says China likely to set growth around 6% in 2020
Global Business
04:13

China's economic growth is expected at the lower end of six percent, despite achieving relatively high growth rates in recent years, according to an economist from Nomura.

Lu Ting, Chief China Economist at Nomura, said that while he believes that the Chinese government "has achieved quite stable and also high growth" and "made very big contributions to global economic growth", it was more likely to set "more flexible" targets moving into 2020. "Well, I believe that most likely China will set more flexible growth targets. This year's growth target is from six to 6.5 percent, and I believe it is much more sensible to set growth targets at around six percent," he said.

Lu said that a growth rate of any higher "does not make sense" as it would be costly to the country. However, he added that the lower growth rate is not necessarily a bad thing.

"I think that by achieving a relatively lower growth, but of course not much lower, I think slightly below six percent, will give the Chinese government some space to clear up some issues which is kind of leftover from past couple of years," he said. 

Lu cited issues with non-performing loans in small-and-medium sized banks and "not-so-good" assets in the bond market. 

Nomura on impact of China-U.S. trade tensions

Meanwhile, Lu said that the China-U.S. trade issues had negatively impacted China's economic growth directly by "about 0.5 to 1 percent", and he expects a similar impact in 2020.

"For the first 10 months this year, China's export growth in dollar terms was only about zero percent. Which means there was no growth at all. Last year it was 10 percent. Of course last year's 10 percent was to some extent driven by some front-loading."

Another impact is on the confidence of Chinese entrepreneurs and global multinationals, which could be seen in the manufacturing investment growth which slowed from 9.5 percent to 2.6 percent in 2019. 

"This slowdown in manufacturing investment growth also have relative impact on China's economic growth, and I put the number at about 0.7 percent," said Lu. 

( CGTN's Xia Cheng contributed to this story.)