China's macroeconomic outlook

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Due to a decline in domestic investment and international trade, China's real GDP in the first half of 2012 fell below expectations. Forecasts from the Quarterly Macroeconomic Model (CQMM) suggest a moderate slowdown in growth for 2013, attributed to a slightly proactive macro control policy. GDP is projected to grow by 8.01 percent in 2012, rebounding to 8.29 percent in 2013, while the Consumer Price Index (CPI) is expected to decrease to 2.9 percent in 2012 and rise to 3.27 percent in 2013. If the euro area’s sovereign debt crisis worsens in late 2012, real GDP could drop to 7.71 percent for 2012 and 7.5 percent for 2013. Despite potential external economic challenges, growth is anticipated to remain above 7.5 percent. To achieve a higher growth rate through a “2 trillion massive investment package,” GDP could rise to 8.25 and 8.86 percent for 2012 and 2013, albeit with risks of inflation and structural issues. CQMM indicates that the government should maintain an 8 percent growth rate through timely monetary policy adjustments while focusing on structural changes via fiscal policies. Long-term reforms are essential to address structural imbalances, enhance market competition, and sustain growth.