Thursday, July 17, 2014

"Citi: China to slow to 5-6%"

From MacroBusiness:
From Citi today comes a nicely reasoned base case for China:
A tricky path, with cliffs on both sides – With a painful correction unfurling in the domestic property/construction sector, China officials are likely to accept stimulus risks and focus on cyclical policy measures to manage economic growth downside, with targeted actions to increase property demand while keeping monetary and credit conditions accommodative. A mild growth rebound is likely in 2H, but could be transitory, and we expect further moderation in 2015.
http://www.macrobusiness.com.au/wp-content/uploads/2014/07/hj-h.png
 More policy easing, including policy rate cuts in 1H15, looks likely to avoid risks of slipping into a hard-landing. Structural reform is meanwhile not forgotten, and the pace of reform has picked up a bit recently with a rough timetable of hukou, fiscal and SOE reforms emerging – but these measures are unlikely to be near-term game-changers, and structural reform initiatives will be taken slowly, cautiously.

At a structural inflection point – International experiences suggest that GDP growth rates are often halved once GDP per capita hits the 10k international dollar mark. China is right at this inflection point....MORE