Why we forecast a soft landing for China

ON EMs

Although the Chinese economy has shown continued signs of deterioration, we maintain our view of a "soft landing" scenario.

Government policy actions to support economic growth have, so far, been limited.   In fact, we believe the reason why the Chinese government has not eased policy aggressively is because they do not wish to create another bubble situation, particularly relating to the property market. The recent extension of quantitative easing policies in the US and Japan could lead to greater flows of money into China and other emerging markets. These flows make it harder to manage the economy as it increases inflationary risks. This therefore limits the government’s flexibility from a monetary pe...