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Michael Buchanan
michael.buchanan@gs.com
+852 2978 1802
Goohoon Kwon
goohoon.kwon@gs.com
+822 3788 1775
Tushar Poddar
tushar.poddar@gs.com
+91 22 6616 9042
Enoch Fung
enoch.fung@gs.com
+852 2978 0784
Helen (Hong) Qiao
helen.qiao@gs.com
+852 2978 1630
Yu Song
yu.song@gs.com
+852 2978 1260
Mark Tan
mark.tan@gs.com
+852 2978 2676
Pranjul Bhandari
pranjul.bhandari@gs.com
+91 22 6616 9169
Shirla Sum
shirla.sum@gs.com
+852 2978 6634
Fiona Lake (Global Markets)
fiona.lake@gs.com
+852 2978 6088
Can growth recover before China rebalances?
The Chinese economy is experiencing its sharpest slowdown in 30 years, as industrial production growth drops on the back of weaker external demand and real estate investment.
We analyze current industrial structures, inventory levels and exposure to external demand to see what has changed in China’s ability to weather the global economic crisis this time, compared with the previous downturns in 1998 and 2001. We believe the Chinese economy is in a better position to avoid a hard landing in the short term, but will need to rotate the growth driver to be more domestic-demand driven for sustainable growth close to the trend level of 9.5%-10% year on year over the medium to long term. Policy stimuli will likely boost growth in the next few quarters, but eventually will have to shift towards rebalancing the economic structure over the long term.