China: Growth in line with modest slowdown – Wells Fargo

Analysts at Wells Fargo, explained that Real GDP growth in China slowed slightly during the second quarter but the slowdown was in line with expectations. They see growth slowing to 6.6% in 2018.  

Key Quotes:  

“Real GDP growth in China slowed slightly in Q2-2018 just as a potential China-United States trade war started heating up. As we look toward the second half of the year and 2019, we expect Chinese economic growth to slow, but in a manageable way consistent with an economy that faces structural  headwinds from high private sector debt levels and an aging population. Tariffs represent a potential downside risk to our forecast, but the hit to exports probably would not be large enough  to cause the $12 trillion Chinese economy to slide into outright recession.”

“The authorities in China have a strong interest in preventing growth from slowing too sharply, and they would likely take the policy steps necessary to prevent such a development. As more details emerge on the newest tariff threats, we will monitor them closely and update our forecast accordingly. For now, we look for real GDP growth in China to slow to 6.6 percent in 2018 and 6.0 percent in 2019, down from 6.9 percent in 2017.”