Chinese growth has slowed, but not stalled, and inflation has also eased. In short, Chinese authorities have successfully engineered a “soft landing” for their economy.
There is now greater scope to ease monetary policy – largely a lowering of the required reserves that banks need to hold at the central bank.
Chinese authorities are being careful not to crank up growth too quickly. But a staged lowering of reserve requirements would clearly be positive for Australian resources companies. Engineering a slowdown is a useful feat but the trick is not to let the downward momentum go too far.
Other data out today showed that Chinese inflation has retraced to a near two-year low. Clearly the economy had to slow to a more sustainable pace and inflation had to come down, and the objectives have been achieved.
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