Amy Yuan Zhuang, Nordea's Chief Asia Analyst, suggests that China’s growth is solid now but over the course of the year, they expect it to be dragged down by a cooling housing, monetary tightening and protectionism.
Key Quotes
“On the other side, infrastructure investment and household consumption will continue supporting growth.”
“The Chinese economy delivered solid growth of 6.8% y/y in Q1, same as consensus expectation and slightly higher than our forecast of 6.7%.”
“However, we do not expect the positive momentum to last. Both domestic and external demand are at risk of deteriorating over the course of this year, prompting growth to moderate. In fact, the quarter-on-quarter growth of 1.4% in Q1, which is lower than the previous reading of 1.6%, suggests that momentum is weakening.”
“The main drag to domestic activity this year will be the government’s efforts to cool the housing market and construction starts. The manufacturing sector will be affected and the PMI indices would likely fall below 50. Slowing manufacturing activity is already showing signs. The Caixin PMI showed a broad-based fall in all major sub-indices in March. Industrial production, also released today, grew by 6% in March, more slowly than the first two months of the year.”
“Apart from government stimulus, in the form of infrastructure investment, household consumption will likely continue functioning as a growth driver. In Q1, consumption contributed with more than two-third of the total GDP growth. The recovery in industrial profits last year is expected to lift household disposal income this year and support the consumption story.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.