Salient to Investors:

  • Analysts still expect the slowest full-year expansion in 2014 since 1990.
  • Zhu Haibin at JPMorgan Chase says the economic data are positive and the government will continue to support key sectors but not expand to other sectors.
  • Liu Li-Gang at Australia & New Zealand Banking raised their 2014 growth forecast to 7.5 % as fixed-asset investment accelerates to 18 percent in half2 and said further monetary easing will be needed to reduce downside risks to the economy and help meet China’s 7.5 percent growth target. He said high inventories of commodities like iron ore risk growth.
  • UBS estimates the real-estate industry and property-generated goods and materials account for more than a quarter of final demand in the economy.
  • Sheng Laiyun at the National Bureau of Statistics said China’s growth volatility will lessen as services take a bigger share of the economy.
  • Ding Shuang at Citigroup said global demand and monetary easing may help the economy rebound in half2, but property-investment slowdown will weigh more heavily in 2015.
  • In 2013, JPMorgan compared China’s borrowing surge to the 1980s run-up to Japan’s lost decade. China’s aggregate financing as a percent of GDP rose to 206 % in Q2 2014 versus 166 % at the end of 2011.

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