Chinese economic data continues to indicate that growth momentum is moderating in a controlled and contained manner

Chinese economic data continues to indicate that growth momentum is moderating in a controlled and contained manner. The growth decline is certainly not fast and will not be alarming to authorities even though many economists and market commentators will claim that the weak headline data warrants a more aggressive policy support. To date the central bank has offered targeted loans to select banks and the planning agency has approved a range of infrastructure projects in roads and railways. However, the response of stimulus is likely to remain restrained given the powerful headwinds from a major property correction, large overcapacity in several key upstream industries, working age population contraction and an overleveraged corporate sector. However, Chinese authorities seem content as long as the domestic the labour market holds together, which suggests that the government will let the economy slow below this year's +7.5 growth target - which is a target that it can only reached through asset bubbles, which are ultimately unsustainable anyway. (VIEW LINK)