China Economic Outlook. Fourth Quarter 2014

China’s growth further moderated in Q3. The lackluster domestic demand has prompted the authorities to implement additional stimulus measures to revive real estate market and boost growth momentum. We maintain our growth projections of 7.2% for 2014 and 7.0% for 2015. Headline inflation is expected to rise gradually while the RMB could appreciate by 2-3% next year. Moreover, policy stance will remain “pro-growth” as the authorities continue to press ahead with long-term structural reforms. Risks are still to the downside. Risks concentrate on uncertainties surrounding the US monetary policy normalization, the sluggish real estate market as well as the debt overhang of local governments.

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