(Yicai) Nov. 27 -- The Chinese economy will likely expand 5 percent next year, according to the deputy director of the Institute of Finance and Banking at the Chinese Academy of Social Sciences.

China's gross domestic product growth is expected to swing between 4.8 percent and 5 percent next year, increasing slower in the first half and accelerating in the second one, Zhang Ming said in a paper where he presented 10 key macroeconomic predictions for next year.

Setting the GDP growth target at 5 percent aims to ensure the country's objective of doubling the per capita GDP by 2035, noted Zhang, who is also the deputy director of the National Institution for Finance and Development.

In terms of fiscal policy, Zhang forecast that the central government will raise the fiscal deficit to between 4 percent and 4.5 percent of the GDP next year, with special treasury bonds likely to be issued to support infrastructure and livelihood projects.

The consumer price index's growth target will probably be set at 2 percent for next year, according to Zhang. If the actual rate falls below that, China will keep its monetary policy more accommodative.

The country is expected to cut the reserve requirement ratio twice and lower the one-year and five-year loan prime rates by 50 basis points in 2025, Zhang added. The existing mortgage rates may also be reduced.

The exchange rate of the Chinese yuan versus the US dollar will likely fluctuate around 7.2 next year, Zhang predicted.

Regarding the real estate market, Zhang believes that Beijing, Shanghai, and Shenzhen will follow Guangzhou in abolishing restrictions on home purchases, loans, and sales. As a result, prices of second-hand homes in core areas of first-tier cities will stabilize or even slightly rebound. Local governments may also increase support for leading private developers.

On Nov. 8, China unveiled a debt package including CNY6 trillion (USD827.4 billion) debt limit, CNY4 trillion new special bonds, and CNY2 trillion hidden debts from housing revitalization projects by 2029.

Next year, the package, also known as the 6-4-2 plan, is expected to partially alleviate the fiscal pressure of debt resolution and interest repayment on local governments, Zhang said.

Long-term investors, such as local social security funds, are likely to increase their participation in the stock market, Zhang noted, adding that the China Securities Regulatory Commission will probably keep improving corporate governance mechanisms and related stock market regulations.

The Shanghai Composite Index is expected to fluctuate between 3,200 and 3,700, according to Zhang. It rose 0.5 percent to 3,276.58 as of lunch break today. The 10-year government bond yield may hover around 2 percent.

Editor: Futura Costaglione