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China: Has the Economy Soft-landed?
- Yesterday’s national account release completes the snapshot picture of the Chinese economy as of the end of June in a manner that is largely encouraging, both from the standpoint of growth and of medium-term price stability.
- The central bank and the government have a little more room to tighten should they deem it beneficial and necessary in net-terms (one more 25 basis points hike is at least 50/50 probable).
- Still, at this point of the cycle the data also suggest (admittedly less clearly, however) that the risk of excessive tightening is in the horizon, given the deceleration of lending and the lags with which monetary policy affect the macro-economy.