The economy will grow steadily within a reasonable range next year, according to estimates by the People’s Bank of China based on the performance of the economy and policies over the first three quarters of 2015.

Based on the latest benchmark forecasts, the PBOC estimated that if powerful fiscal, and prudent monetary policies, continue, the real GDP growth rate of 2015 will be 6.9 percent, and for 2016 it will be 6.8 percent.

The PBOC’s benchmark forecast for this year’s Consumer Price Index growth is 1.5 percent and for next year it is 1.7 percent.

Its benchmark forecast for this year’s ratio of the current account surplus to GDP is 3 percent and for next year’s ratio it is 2.8 percent.

The PBOC listed a number of factors that will help economic growth in 2016.

First, the latest estimates by the International Monetary Fund show that the global economy will grow a bit faster next year. The IMF issued a report in October estimating that the global economy will grow at 3.6 percent, 0.5 percentage points higher than this year.

Second, China’s sales of commercial housing have been recovering, thus investment next year in the real estate sector is likely to recover, though slowly.

Third, new infrastructural projects will help boost investment. The first half of 2015 witnessed more than 800 billion yuan of investment in infrastructure, including railways, subways and airports. The development of the Belt and Road Initiative and the international cooperation on industrial capacity will also help boost investment in infrastructure and manufacturing in West China.

Fourth, macroeconomic policies the PBOC adopted this year, such as cutting interest rates and the reserve ratio has lowered the cost of financing. The PBOC estimated that the adjustment of fiscal and monetary policies will have a more positive effect on the economy starting somewhere between the fourth quarter of this year and the first half of next year, five to nine months after the adjustments took place.

Fifth, the government has been carrying out administrative procedure reform and encouraging people to innovate and start their own businesses and this will boost the economy.

As to the challenges facing the economy, there are three factors that may pose downward pressure next year.

First, the growth of manufacturing is low and is likely to slow down in the first half of next year. The problem of overcapacity hasn’t been relieved.

Second, the bad loan rate is expected to rise, which will make banks more cautious in offering loans, especially to industries with overcapacity, such as coal, iron and steel and building materials, as well as to medium, small and micro-businesses.

Third, uncertainty in both domestic and international financial sectors remains.

The PBOC said that the service, technology and green-energy sectors have been growing fast and will be able to support future economic growth, though current statistics fail to show such growth.

The service sector has taken up more than half of China’s GDP, and it’s growing much faster than manufacturing. The PBOC said that the tertiary industry is the main driver for China’s economic growth, and it’s misleading to judge China’s economy simply by analyzing traditional factors such as industrial value added, cement production and crude steel production.