ING's 2021 Overview: Quantifying Quality Growth

Moving into 2021 ING note that their "simple growth projection for the next 15 years is as follows: There will be faster growth in the first five years, but then slow gradually in the remaining years up to 2035. This projection assumes a roughly stable population. Promoting higher child-birth has been successful in some areas in China. But this policy also faces an ageing population, and won't make much difference to the labour force over this timescale. Our projected real GDP growth rate is 4.5% on average for 2021-2035. Growth in 2021 should be much stronger than this at around 7%.

• The biggest risk factor in 2021 is still the technology war, which we have incorporated into our forecast. This is not just confined to the US and China. Many more economies could become reluctant to use Chinese-made technology because of security concerns.
• We don't expect any significant changes in monetary policy in 2021. The People's Bank of China (PBoC) will take advantage of the stable interest rate environment, to promote market-based interest rate instruments on loan products to pave the way for further interest rate liberalisation.
• The PBoC will do the same for exchange rate liberalisation. The recent fading out of the counter-cyclical factor in daily USDCNY fixing is a step in this direction. USDCNY and USDCNH will be more sensitive to intraday market information. And the CNY trend will also be more market-driven. We expect USDCNY to reach 6.30 by end of 2021."