From SCMP:
Chinese Premier Li Keqiang again voiced his objection to using short-term stimulus policies to boost economic growth and reiterated that reform is the preferred option for the Chinese economy.
“Last year we avoided an economic hard landing and maintained stable economic growth. This achievement was largely because of reforms…If we had used short-term stimulus measures last year, they would have brought future pain,” Li wrote in an article published in Qiushi magazine, the Communist Party mouthpiece.
“Last year’s practice has profound guidance for us,” Li added.
Here is another quote from a recent speech, via the AFR:
The current Chinese leadership recognises the need for political reform and is capable of bringing it about. It is worth dwelling on the words of Premier Li Keqiang in a recent speech: “The key is to reap a reform dividend. We need to make public finances more transparent, liberalise interest rates, cut wasteful government spending and allow small businesses to flourish. Reform will hurt vested interests, but the interests of the vast population are the top priority of the government. I am ready to cut through the vested interests to carry out the much-needed changes.”
Meanwhile, Nomura notes the deterioration in Chinese property prices, vai SMH blog:
- These weakening prices reinforce our view that the property sector passed a turning point in Q1 and will weaken through the rest of 2014.
- We maintain our view that the property sector is China’s top economic risk. As leading indicators, such as sales and new starts, dropped significantly in Q1, we see risks of a sharp correction in this sector taking place in 2014.
- We expect the weak property sector to act as a drag on investment and lead to GDP growth slowing to 7.1% y-o-y in Q2 from 7.4% in Q1.
- We maintain our view that the government will have to loosen monetary policy by cutting the reserve requirement by 50bp in Q2. We believe the likelihood of an interest rate cut in H2 is rising, although it is not yet part our baseline view.
Western analysts have been calling for such for years. They will only get it if the property really crashes, I suspect.