Susan Joho, economist at Julius Baer also saw reason for some degree of cautious optimism.
“Today’s fourth-quarter economic growth number signals that earlier easing measures have started to support the Chinese economy, which is suffering from oversupply in manufacturing,” she said. “Growth came out slightly below consensus at 6.8% y/y in Q4, a similarly strong rate as in the previous quarter, thus taking full-year 2015 growth to 6.9%. With that, China has officially reached its growth target of ‘around 7%’.” She cautioned however, that growth may slow further in 2016 due to downward pressures from the manufacturing slowdown.
Schroders emerging markets economist Craig Botham said he expects further stimulus measures in the near future.
“We had not expected the effects of stimulus to fade quite so soon, and expect December’s weaker data to prompt further rate and reserve ratio cuts in the first quarter of 2016, of 35 and 100 basis points respectively, particularly if intervention proves successful in stemming capital outflows,” he said. “An increase in the fiscal deficit has already been mooted, and an actual number should be provided in March’s National People’s Congress session. Central government may find itself needing to provide more support at the local level to boost investment figures given a weaker lending environment.
