China: More signs of stability, but downside risks remain - HSBC

Research Team at HSBC, notes that the China's 3Q GDP came in at 6.7% y-o-y (1.8%QoQ), in line with consensus while the September activity data were also broadly in line with expectations.

Key Quotes

“Single monthly fixed asset investment grew 9% y-o-y, up from 8.2% in August, as both manufacturing and property investment grew slightly faster. As a result, private investment growth recovered to 4.5%, up from 2.3% in August. Output in the industrial sector slowed, weighed down by over-capacity industries, but the growth impact was offset by services sector growth. With more signs of growth stability, deflationary pressures have continued to ease.

But downside risks remain. Weak external demand is still a growth headwind, while housing-related activity may slow somewhat after more than 20 cities introduced measures to rein in property prices. Therefore macro policies will need to remain accommodative. The balance of policy, however, should shift more to the fiscal side in 2017, with an emphasis on measures to revive private investment.”