Goldman Sachs forecasts lower China growth for 2017

BEIJING - Goldman Sachs expects China to register lower annual growth in 2017 as property and auto sales are likely to slow down.

The bank forecasts a slight slowing in China's GDP growth to 6.5 percent in 2017, from a forecast of 6.7 percent in 2016.

Although Goldman Sachs only expects a modest slowing in real estate investment in 2017, it sees both price and transaction growth slowing significantly, meaning a much lower contribution to China's GDP growth from the housing sector in 2017.

In a report to clients, the bank noted auto sales growth may slow sharply to 3 percent in 2017, from an estimated 15 percent this year, as the government is likely to cut tax rebates for auto purchases in half.

Despite the challenges to growth, the bank said China's 2017 growth will be near the 6.5 percent "bottom line" with a combination of a better external environment and supportive policies.

To lift growth, Goldman Sachs expects China's central bank to cut the reserve requirement ratio at least twice next year to ensure supportive liquidity conditions in the banking system.