Macquarie analysts are freshly returned from a China trip with a somber message:
Overall sentiment towards the Chinese economy was quite sombre among our speakers, with most of them suggesting that we’ve already seen a peak in sequential economic growth for this mini-cycle. However, on the more positive side, there wasn’t yet much pessimism about growth in 2H16, as none of the speakers revealed any expectations for an imminent sharp decline of domestic demand, although a couple of steel mills/traders believed the impact of government stimulus in 1Q16 was more or less over.
In the meantime, concerns over structural problems started to emerge again. We met a semiofficial economist in Beijing and he discussed two such problems with us, namely the diminishing marginal effect of monetary loosening on short-term growth and the increasing lack of policy coordination within the government.
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