At fourth-ranked JPMorgan Chase & Co., Hong Kong-based China economist Grace Ng checks data for exports and imports by digging into numbers provided by trading partners. She drills into electricity consumption numbers, often cited to show economic expansion is slower than published, by examining usage trends in both manufacturing and services, she said.
The next policy move is likely to be a reduction in the amount of cash banks must set aside as reserves, and that probably will be followed by another cut in interest rates, said Goldman’s Song.
“The pace of cutting has not been aggressive enough,” he said on Bloomberg Television Monday. “Until very recently the real interest rate has actually gone up and that’s not helpful.”
Factory-gate deflation has deepened over the past six months, contributing to the highest real borrowing costs for China’s manufacturers since 2009.
External Demand
Song was unfazed by an unexpected drop in April exports and says his optimism over a second-quarter rebound for the economy is buoyed by an anticipated tailwind from external demand.Goldman expects U.S. growth will rebound this quarter in the same way it did in 2014, Song said.
On a quarter-on-quarter annualized basis, gross domestic product growth will pick up to 6.9 percent this quarter, he estimates. Song projects GDP will expand 6.8 percent this year - - near Premier Li Keqiang’s target of about 7 percent -- and full-year growth of 6.7 percent in 2016.
JPMorgan’s Ng also sees a similar trajectory to last year, with policy easing feeding into the economy in coming months as growth in developed markets gathers pace.
Among signs that April data may improve are home sales volume up 18 percent last month from a year earlier in the 29 cities tracked by China Real Estate Information Corp. Some local governments are reporting hefty growth in power use: in Luan of Anhui province, industrial-use power consumption rose 10.4 percent in April from a year earlier.
Stabilization Seen