For Professional Clients and, in Switzerland, for Qualified Investors only. In Israel for Sophisticated Investors only.
English
  • English
en
  • en
Filter by theme
Filter by date
Filter by boutique
Filter by theme
Filter by date
Filter by boutique
No posts matching your criteria
Clear theme
Clear all
No posts matching your criteria
Clear date
Clear all
No posts matching your criteria
Clear boutique
Clear all
For Professional Clients and, in Switzerland, for Qualified Investors only. In Israel for Sophisticated Investors only.
English
  • English
en
  • en
© 2019. BNY Mellon Investment Management International Limited. All rights reserved.
IDEAS AND KNOWLEDGE TO INSPIRE YOUR INVESTMENTS THINKING
22 November 2018

The end of the road for Chinese GDP growth?

We see downside risks to growth in China. Potential indicators of a slowdown are not yet reflected in official GDP figures, which showed 6.7% GDP in the first half of 2018, and which, despite a slight dip in Q3, remain broadly on track to reach the stated full year target of 6.5%. Over the year there has been a dramatic deceleration in fixed asset investment, led by falls in infrastructure spending shown by a dramatic fall in issuance of local government ‘special bonds’ (that are used to finance this spending) in the first half of 2018. This has been a result of domestically-driven economic headwinds in China.

 

Authorities originally appeared content to allow this financing to slow down, given domestic deleveraging efforts and a benign global economic backdrop. However, escalating tensions with the US has prompted China to restart monetary and fiscal stimulus. In the second half of the year, there has been a material rise in local government financing, which is expected to translate into fixed asset investment numbers, naturally subject to a lag. We will closely watch those numbers over the coming months. If a material increase in investment does not occur, it would be a concern for growth, particularly if trade tensions with the US continue to rise. In a risk case scenario, Chinese quarterly GDP could drop to as much as 5.5% in our view, which would be significant for global growth, particularly in regions such as Europe, Australia and New Zealand.

 

Colm McDonagh, head of emerging market fixed income. Insight Investment – a BNY Mellon company

Please note the content on this website is for Investment Professionals only and should be shared responsibly. No other persons should rely on the information contained within this website.

 

Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA or the BNY Mellon funds.

Subscribe to updates