Across The Border | Stronger Chinese economic data in August, but what’s next?
Analysts are divided on whether more government stimulus is on the way. But they agree on the need for ongoing structural reform
China posted solid economic data in August, ostensibly the result of stimulus measures, particularly monetary stimulus taken in 2015 and earlier this year.
For the remainer of the year, however, economists are divided on whether more stimulus is both necessary or on the way, but arguably more important, whether vital structural reforms will continue at the pace needed.
Last week, China announced figures on August’s fixed asset investment, industrial output and retail sales, all of which beat the expectations of analysts polled by Bloomberg, growing by 8.2 per cent, 6.3 per cent and 10.6 per cent, respectively, on a yearly bases.
In addition, Bank of America Merrill Lynch China economist Zhi Xiaojia noted that August’s money and credit data came in stronger than predicted.
“As key data improved, we think the chance of major easing, such as interest rate and RRR cuts [banks’ reserve requirement ratio], is low for the rest of 2016,” Zhi wrote in a research report.
There are also doubts about whether there is much potential left for monetary easing to have an effect.