Mixed opinions on China’s H2 economic outlook
Weakness in private investment, over reliance on state spending to boost growth, and ongoing buildup of debt continue to cause concern
Some of the world’s top finance houses appear split on their projections for China’s economy in the second half of the year.
But the general consensus remains gloomy longer term, suggesting that the better-than-expected second quarter economic growth will peter out early next year, bringing to an end what has been a mini-cycle improvement since the third quarter of last year.
The analysts also predict, that weakness in private investment and over reliance on state investment to boost growth could add to the ongoing buildup of debt — all of which casts considerable doubt on China hitting its targeted 6.7 per cent growth in GDP for the second half.
Despite the Chinese government’s better-than-expected GDP growth announcement earlier this month, Credit Suisse is now forecasting 6.3 per cent growth in the second half, based on a drop in overall investment in the economy.
Growth will continue to be underpinned, it said, by resilient consumption.
Disappointing growth in fixed asset investment of 8.1 per cent in the second quarter and 7.4 per cent year-on-year in June should intensify in the second half
“The bad news is that the disappointing growth in fixed asset investment of 8.1 per cent in the second quarter and 7.4 per cent year-on-year in June should intensify in the second half,” its analysts Ray Farris and Weishen Deng said in a recent note.
