Macroscope | With China’s financial tightening in full swing, risks needs be managed
Careful measures will be important for containing the side effects, allowing the economy to slow at a measured pace for the remainder of this year
After a solid start to the year, the Chinese economy appears to be coming off the boil.
April’s purchasing managers’ index data pointed to some nascent signs of an economy losing momentum after the stellar performance in the first quarter.
Both the official and Caixin measures eased back from their multi-year highs, with sub-components showing a broad-based slowdown in domestic and external demand. The upcoming April activity data will likely corroborate the PMIs, registering a sequential deceleration in growth.
To be sure, the Chinese economy is not about to fall off a cliff. Far from it, manufacturing and services-sector activities, as indicated in the PMIs, are still growing at a respectable clip.
To be sure, the Chinese economy is not about to fall off a cliff. Far from it, manufacturing and services-sector activities, as indicated in the PMIs, are still growing at a respectable clip
What’s more, a favourable rebalancing of growth from upstream/large enterprises to downstream/small companies appears to be taking shape. This can help to support a further recovery in private-sector investment and make growth less reliant on official stimulus.