China: Growth is set to slow moderately – Deutsche Bank

Analysts at Deutsche Bank suggest that in China, growth is set to slow moderately due to fiscal and monetary policy tightening and at the same time we need to keep a watch on inflation and interest rate risks as well.

Key Quotes

“China’s growth is expected to slow in 2018, after the strong performance so far in 2017

− Investment slowed down, property sales growth turned negative in October”

“The slowdown is driven by policies

− Government is likely to tolerate slower growth to make room for deleveraging, following the policy message from the 19th CPC Party Congress

− Monetary, fiscal, and property market policies may be tightened further”

“Risks may stem from inflation and interest rates in the next 6 months…

− Inflation is expected to pick up in early 2018

− Interest rates are on the rise amid tightening financial sector regulations”

“…but overall, risks should be manageable. We do not expect a hard landing

− We expect the government to loosen policy on the property sector some time in H1. Investment will likely rebound in H2 2018”