Monday, April 17, 2017

Strong Start, But Headwinds Loom

Economic Research
17 April 2017

Economic Update

China’s economic growth recorded a strong start in 1Q17, given support from the manufacturing sector and more spending on infrastructure projects. The growth momentum should continue in 2Q17, but we still expect to see more headwinds from 2H17 onwards, amid:
1. More cooling measures in the property market;
2. Sluggish recovery of private consumption due to slower income growth and less demand for automobiles;
3. Industrial inventory possibly peaking in mid-2017;
4. Funding difficulties for certain local governments as land sales decline;
5. The tightening bias held by the PBoC;
As such, GDP growth could slide towards 6.5% YoY in 2H17 and slow down
further to 6.4% in 2018.

Economist:  Zhang Fan| +8621 6288 9611 ext 105

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