China Economy 2016 Forecast: After Slowdown, Stock Market Uncertainty Continues

Following a stock market slowdown in August 2015 that saw the Shanghai Composite fall 8.5 percent – its worst single day in eight years – the Chinese economy continues to struggle amid continuing uncertainty, as labor unrest and lagging GDP growth spread throughout the vast country. As businesses, factories and financial services firms grapple with the economic reality in China, economists disagree on the nation’s fiscal outlook.

China has the world's second-largest economy behind the United States, and the rapidly developing nation has become an industrial giant over the past two decades. The economy slowed down throughout 2014 and 2015 and the stock market tumble in August 2015, dubbed China’s Black Monday, sent shockwaves throughout the world. Chinese economic growth has continued to shrink, hitting a 25-year low of 6.9 percent in January, the Wall Street Journal reported.

Factories have been unable to pay their employees, and many workers have skipped New Year celebrations to stage protests. "The developer has kept using the fact that they have no money as an excuse. As of now they haven't paid us a single penny," Fan Fu, a laborer in Hebei province, told Reuters, adding, "We really don't have any other options."

Despite persistent difficulties, an optimistic future awaits China, according to a report in the Financial Times Sunday. Fluctuations in the market have not greatly affected average Chinese households, the report argued. “Domestic wealth invested in stock markets is insignificant as a proportion of Chinese household wealth,” Chen Long of Gavekal Dragonomics, an investment research firm, told the FT.

Several top economists, however, predict a much bleaker outlook for China in 2016, according to analysis in the Wall Street Journal and Reuters. China’s growth will continue to shrink to 6.7 percent in 2016, according to a poll of economic forecasters, owing to a supply glut across sectors, Reuters reported. “We’re going to have a choppier sea ahead of us, ” Nomura Group economist Yang Zhao told the Wall Street Journal in January.