Chinese gross domestic product (GDP) will get a substantial boost next year due to a rebound in consumption and services, accelerating income growth and fiscal stimulus, international economic research firm Capital Economics says.

The Chinese economy is projected to grow by 10 percent in 2021, higher than the current market consensus of 7.9 percent, according to the company’s analysts.

“Looking ahead, while the analyst consensus has turned more upbeat in recent months, we think there is still room for further upside surprises,” the latest research note by the London-based consultancy reads.

According to Capital Economics, domestic drivers of growth will stay strong in the near term with the latest boost in exports to start unwinding amid vaccine rollouts in developed markets.

An increase in savings rates registered earlier this year will reportedly cause a boost in spending as confidence improves. The fourth quarter of 2020 will see China’s economic output grow higher compared to Capital Economics’ forecast a year ago, with its economic output to stay above the trend for the next year.

The projected economic rise will reportedly trigger some state policy tightening in 2021 with focus to be shifted back to controlling the swift growth in national debt. The country’s central bank will start to hike the rates on its lending facilities next year, according to the research.

“This policy reversal is unlikely to derail the recovery and we expect China’s economy to remain a global outperformer next year,” Capital Economics said.

At the same time, China’s economy reportedly faces some downside risks from the property sector and credit markets. The economic growth will slow down by the end of 2021 with the appreciation of the national currency to level off.

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