Stable growth for greater sustainability

A visitor takes a close look at the smartwatch unveiled by Lenovo Group Ltd in Beijing, May 28, 2015. [Photo/China Daily]

GDP growth holding steady

China's economy grew 6.7 per-cent year-on-year in the third quarter, slightly stronger than expected.

The year-to-date strength of real estate activities has helped to stabilize property and industrial investment and support related consumption. These have more than offset slower infrastructure investment. Private fixed asset investment has improved over the past two months, partly because of property investment, which suggests that some of the recent improvement in corporate revenue and profits may be starting to trickle through.

We expect GDP growth in the fourth quarter to slow modestly to 6.5-6.6 percent year-on-year, with property sales easing in the next couple of months, before slowing more sharply in 2017. The property construction and investment rebound should last a couple of months longer than that of sales, especially as destocking continues.

Given the growth target is attainable and policymakers have concerns over a property bubble and rising leverage, we do not expect any notable credit acceleration or interest rate cut by year-end.

Wang Tao, chief China economist, UBS Investment Bank