China's growth risks remain to the downside

As the Chinese economy continues to face domestic headwinds from excess capacity in many industries, oversupply in the housing market, high debt/GDP (especially among the state sector and local governments), as well as uncertain external demand, growth risks are expected to remain to the downside through 2016. 

While the government still has room to ease on the monetary and fiscal front, fiscal stimulus comes at a cost of worsening the debt burden and economic imbalance, while the boost from interest rate cuts to economic growth is limited given the ineffective monetary transmission and interest rate liberalisation. 

"That said, the central government is expected to leverage up in H2 via policy bank financing in the areas of infrastructure investment to prevent growth from sliding further amid subdued property and manufacturing investment. A relatively stable growth will also support employment and consumption growth", says Barclays.