Economy Loses More Steam

Economic Research	13 Jun 2016
China
Economic Highlights
Economy Loses More Steam China’s FAI growth came in much lower than expected in May 2016, due to a rapid slowdown in private investment; while for industrial production and retail sales growth, the figures are basically in line with expectation. Looking forward, we believe China’s economic recovery will remain sluggish in the coming quarters, as the economy will be dragged down by weakening demand, narrowing government spending, rising funding cost and pains from supply-side reforms. Policymakers are likely to stay cautious to throw out massive stimulus packages, and will rely more on enlarged fiscal deficit, growing policy banks’ loans and more PPP projects to finance investment expenditures. Overall, we expect China’s GDP to slide towards 6.6% YoY and 6.5% YoY in 2Q16 and 2H16. Economist:  Zhang Fan| +8621 6288 9611 ext 105
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