As efforts to slow the mainland economy begin to take effect, most analysts and fund managers are expecting the soft landing the measures were designed to deliver. However, they warn against rushing into China-related plays, at least until the dust settles.
'We think there's already a soft landing in evidence,' said ING Investment Management Asia-Pacific chief Chris Ryan.
China has been trying to slow its breakneck pace of growth amid fears of overheating and rising inflation. The economy is expected to grow 11.4 per cent in the second quarter after hitting 9.8 per cent in the first three months of the year, according to forecasts from the central government. Inflation hit a seven-year high of 4.4 per cent in May and is expected to rise further.
The government is encouraging banks to restrain lending to certain sectors of the economy it fears are overheating, such as steel, construction and property.
'The encouragement of lenders not to lend to more speculative investments is actually producing a slowdown in the number of approvals and the number of applications for such investments,' Mr Ryan said. 'While that may not seem to be wholly significant, the impact on the economy generally and the pace of growth and new investment is significant.'
The Bank of China says it halved its lending in May to overheating sectors, but declined to specify which industries.