(Yicai Global) Dec. 8 -- China's economy is expected to grow by about 6.5 percent in 2018 buoyed by increased consumer spending and business expansion, said Fan Jianping, chief economist at the Information Center of China during a speech at Huatai Futures Co.'s annual investor meeting in Shanghai yesterday.

Upward momentum in the country's economy will mainly come from business expansion attributable to improved corporate profits, as well as increased consumer spending due to increasing incomes among citizens, he said.

Negative effects will mainly derive from the carryover effects of stricter regulation in the real estate market and increased capital costs.

In terms of the three key components of GDP, fixed asset investment remains under pressure, while consumer spending and overseas market demand will continue to be drivers of growth, said Fan. Growth in the Producer Price Index (PPI) is expected to be three percentage points down on 2017 at 3.5 percent, while that of the Consumer Price Index will be one percentage point higher at 2.5 percent.

China's macro-policy will remain stable, and its active financial policy and robust monetary policy will move further towards a neutral state. The trend of a depreciating RMB has come to an end, Fan said, and the exchange rate will fluctuate between 6.5 and 6.9 in 2018.

China will gain a significant edge in areas requiring high degrees of division of labor and cooperation across industry chains. Fan gave examples of sectors in China that have achieved technological catch-ups, such as high-speed rail and 5G networks. In keeping with China's unique advantages, the country's industrial upgrade will start with the internet industry including  Big Data, artificial intelligence, pushing sectors towards the medium and high ends of the industry, value, and innovation chains. The high technology, big consumer spending, pan-entertainment, and smart elderly care sectors will represent four major market breakthroughs, he added.

China will start conditional financial de-leveraging in 2018 to pave the way for lowering the country's macro-leverage ratio , as it has already made some progress in reining in industrial productivity excess and excesses in real estate stock, Fan Jianping noted.

Established in 1987, the State Information Center is a Chinese government policy-making think tank affiliated to the National Development and Reform Commission, the country's top macroeconomic planner.