No fear but caution about China’s growth

International bank HSBC said that in line with latest economic data that have been disappointing, it has cut its growth forecasts about China from 7.7 percent to 7.3 for 2015 and from 7.6 percent to 7.4 for 2016. First and foremost, disinflationary pressure reflects “weak demand.” As a solution, HSBC recommended strong measures on behalf of the People’s Bank of China (PBOC) with further “broad-based rate cuts.” HSBC advocated further liberalization and continued investment in infrastructure and reform. China’s property market will also remain under pressure, predicted HSBC which interpreted this as “stabilization” but not “collapse.” It is unlikely China will enter a “currency war” and though the Yuan’s volatility is expected to rise next year, its nominal value should appreciate against the currency of China’s trading partners.