Flash Comment China: Growth appears to be slowing

Both of China's manufacturing PMIs showed weakness in June albeit to differing degrees. Nonetheless, message is clear: Chinese growth is slowing, but we continue to regard it as a moderation rather than a severe slowdown. Based on the development in PMIs, GDP growth will slow to 9% AR in H2 10 from about 12% q/q AR in Q1 10. While it may raise some concerns about the strength of the global recovery, this is not entirely negative for China. The risk of overheating is now receding fast and in that sense China is building a foundation for a soft landing of the economy as it is now unlikely to tighten monetary policy aggressively. It also supports the view that the appreciation of CNY will be modest

 

Growth appears to be slowing china