01.11.201302:48:00UTC+00Research: China's Gdp Growth Likely to Slow to 7.1% in 2014

Quotes from Barclays Capital:

-We expect some further moderation of China's industrial production growth to 9.8%y/y in October (to be released on 9th November) from 10.2% and 10.4% in September and August respectively.

-Fundamental challenges including industry overcapacity, mounting local government debt, rising financial risks and the property bubble will constrain policy options and we had been expecting a neutral monetary policy stance with a tightening bias since August.

-We forecast GDP growth to slow to 7.1% in 2014 from 7.6% this year, with quarterly growth moderating from 7.8% in Q3 to 7.5% y/y over Q4-Q1. We are cautiously optimistic about the reform initiatives likely to be announced at the Third Plenum (9-12 November). Meaningful fiscal reforms will be our gauge of the new leaders' ability to build a consensus for the urgent but complicated reforms China needs.

-We expect the 2014 GDP growth target to be lowered to 7% from 7.5%, which would also show the leaders' tolerance for short-term pain (lower growth) to achieve a rebalancing towards a consumption-led economy.