China: We look for further deceleration – Wells Fargo

By FXStreet Analysts from Wells Fargo analyze if the Chinese economy is headed for a “soft landing”. They expect further deceleration but no collapse.

Key Quotes:

“Data released today (04/15) showed that real GDP in China grew at a year-overyear rate of 6.7 percent in the first quarter. The outturn represented a modest slowdown relative to the 6.8 percent rate that was registered in Q4-2015, but it exactly matched the consensus forecast. In short, it appears that the Chinese economy is more or less coming in for a “soft landing.”

“In our view, growth in the Chinese economy will continue to slow. We look for real GDP, which grew 6.9 percent in 2015, to expand 6.3 percent this year and 5.8 percent in 2017.”

“Our forecasted growth rates are softer than the consensus for both years. But we believe that the worst fears of an imminent collapse in the Chinese economy are overblown. With the central bank’s main policy rate at 4.35 percent, authorities have ample “ammunition” to support the economy, should they need it. China indeed has some long-term economic problems, but a near-term collapse in economic activity does not seem likely.”
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Source:: FX Street