Salient to Investors:
Louis Kuijs at RBS said the liquidity crunch has increased downside risks and estimates China will reduce aggregate credit by 1.8 trillion yuan in 2013, but as long as policy makers cushion the impact through fiscal and exchange-rate measures, the damage to the economy could be quite modest. Kuijs said local government investment projects and small companies are going to be the hardest hit.
The median analyst predicts GDP rose 7.5 percent in Q2 from a year earlier. Most analysts approve of China’s handling of the credit crunch.
Citigroup cut its 2013 growth forecast to 7.4 percent from 7.6 percent on low odds of government stimulus, a slowdown in credit expansion, and less accommodative lending in half2.
Yao Wei at Societe Generale cut her credit estimate for 2013 to 19 trillion yuan from a pre-squeeze 22 trillion yuan, and said credit growth has been accelerating without much GDP.
Jimmy Zhu at FXPrimus said despite all the talk about reform, China will still focus on growth, and expects the credit crunch to have a very short life.
Yu Song et al at Goldman Sachs said export data are likely to be under continued pressures as China tries to stop over-reporting of figures, while gains in imports will likely face separate pressures from weak domestic demand growth.
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