Citi: China to slow to 5-6%

From Citi after a recent China tour:

…We left with the impression that China’s GDP growth could gradually approach a new steady state of 5-6% after the transition.

…Near-term growth risk and possible policy instruments – Chinese authorities are quite keen to defend 7.5% growth this year and the government’s inclination to emphasize its growth target comes from fears about the property sector. The PBOC aims to avoid excessive stimulus, and is relatively optimistic about export growth.

Soft landing is assumed in the property sector – There is a general sense that risks are local, not nationwide. It’s agreed that China’s property market is probably turning from upper cycle to down cycle. A property price correction may last 2-4 years with price drop by 20% or less nationwide…A soft landing assumes that property investment growth is likely to be cut to 5-10% in coming years.

Job growth vs. the bottom-line of GDP growth – Some estimate that GDP growth as low as 5.7% might be enough to secure the creation of the 8 million jobs per year that the economy needs to generate… Considering a necessary buffer, 6.5-6.8% GDP growth should be enough to support needed job growth.

That looks right to me, barring an accident!