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Bloomberg
As the latest China data showed some softening at the end of an upbeat year, reports for this month are looking likely to show the economy keeping pace despite slowing industrial profits.
The earliest indicators for January show momentum remains intact, with sales managers the most upbeat since July, financial experts more optimistic, and satellite imagery signalling manufacturing conditions are improving for the first time in four months. That reading is in line with forecasts that both main factory gauges remained at solidly expansionary levels.
“The strong momentum will likely be carried over to the first quarter, with the economy being supported by strong external demand and domestic consumption,†said Xia Le, chief Asia economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. “The risk factor is deleveraging, as the market is still underestimating how tough it could be as China shifts its focus to the quality rather than speed of the growth.â€
Such a transition was Beijing’s main message to the world as Liu He, President Xi Jinping’s chief economic adviser, told in Davos that China is moving to upgrade its output rather than simply hit numerical targets. Robust economic data give it room to reform without as much worry the overhaul may undermine growth.