China’s economic growth in the first half of this year performed better than most economists expected, making it difficult for analysts to predict what's likely to come in future quarters. Economic research and surveys regarding China’s economic outlook has been showing mixed results, with some economists decidedly optimistic about China’s future economic situation while other analysts are equally decidedly not.
Anhua Ding, Chief Economist at China Merchants Bank and Director of China Chief Economist Forum, said at a private banking event that “we are overall optimistic about global economic outlook, but slightly pessimistic about China's economic future for three reasons.”
First, the high debt problem clouds China’s future growth; second, trade protectionism is in a haze - the honeymoon period between China and the United States will soon pass; third, regulatory tightening will lead to a sharp rise in risk aversion."
Regarding the tightened regulation, Ding also mentioned that because of the unprecedented government financing restriction (No. 50 Paper and No. 87 Paper), investment growth in both infrastructure and the real estate industry will go down.The ability to fund planned capital expenditures are also in question.
Overall, it is always good to keep several things in mind. Even with some economic hardships along the way, China's economy did beat the outlook, growing 6.9 percent in the second quarter this year. But the view that a starting point of a big business cycle is now underway is too optimistic. Looking ahead, economic growth for the second half of the year faces a downward trend,adn with an uncertain market, it is always a good idea to keep a forward-looking judgment to find potential investment opportunities through a global asset allocation.