From Macquarie today:
Is the economy in a hard landing? In the past five years, every year there was a point when pundits claimed that “China is in a hard landing!” Now it’s such a moment again. While the economy remains pretty weak, we see little evidence suggesting that the fundamentals have deteriorated sharply over the past few months. Instead, while the economy is still slowing down, mainly dragged by the financial sector, the deceleration is in a gradual way (see our data preview for Jan). Instead of dwelling on indicators mainly determined by the industrial sector (we argued two years ago that Li Keqiang index is much less relevant these days), we prefer to take a more nuanced view on China’s economy by digging deeper into various data across regions and industries (see a note we published last week: China in 2015: Huge divergence).
I’m sorry top say it but the Chinese rebalancing has barely even started. It is not only about the shift from investment to consumption, it is also about the shift from credit to productivity as a growth driver. Until we see that transition underway we really don’t know just how deep the old economy will sink.
