Sunday, September 14, 2014

China about to miss the 7.5% GDP growth target

Economic reports from China continue to disappoint. Here are three recent data points:

1. Fixed asset investment growth, while still quite strong relative to the rest of the world, continues to fall.

Source:, National Bureau of Statistics of China

2. Retail sales year-over-year growth fell below 12% again, making the switch from export-based economy to domestic consumption more difficult.

Source:, National Bureau of Statistics of China

3. More importantly, China's industrial production growth is at the lowest level since the financial crisis.

Source:, National Bureau of Statistics of China

Analysts are suggesting that China may now miss its target of 7.5% GDP growth unless Beijing puts in place outright stimulus programs.
FT: - ANZ said the data “reinforced our view that China’s growth momentum has decelerated faster than anticipated” on the back of a sluggish property market and slowing credit expansion. It added that China generally needs 9 per cent industrial production growth to boost the economy by 7.5 per cent. “Short of outright policy easing, China will likely miss the 7.5 per cent growth target this year, and a sharp economic slowdown will endanger the undergoing structural reforms,” Liu Ligang and Zhou Hao, ANZ economists, wrote in a research note. “Chinese authorities should further relax monetary policy as soon as possible to prevent the growth momentum from decelerating further.”

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