China’s short-term economic growth prospects seem strong

The Chinese economic growth in the second quarter continued to stay strong at 6.9 percent. The short-term growth prospects are strong. Along with a stable growth in consumption, growth benefitted from foreign trade and investment growth. Especially China’s real estate sector and construction have remained surprisingly well in spite of the policy tightening.

Strong growth is likely to continue in the autumn, noted Nordea Bank in a research report. The most recent monthly indicators have been solid and the PMIs show that growth is likely to decelerate in the second half of this year but only to a limited extent.

The number one event in the autumn in China would be the 19th National Congress of the Communist Party where the alterations to the top leadership are announced. There is more uncertainty than normally regarding the nominations and how President Xi would cement his power, said Nordea Bank.

The immediate economic effects of the Congress are estimated to be restricted, the tone of the meeting might shed some light on the economic policies in years ahead. The biggest question about China’s future growth profile is whether the leadership has the courage to put brakes on the fast credit growth at the expense of GDP growth, added Nordea Bank.

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