China Center Data Flash: Momentum is weak as China enters 2016
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Data Flash is a brief interpretive summary of China’s official monthly economic data release.
Investment and policy stasis ahead of March NPC is set to yield a very weak Q1.
A rather significant RMB devaluation, possibly to 6.9 USD-RMB, is considered very likely over the quarter to enable the PBoC to regain control of monetary policy.
In the wake of devaluation, “overshoot” dynamics in terms of sentiment toward the economy are likely to play out. MNCs should be aware of this phenomenon, and not get distracted.
From Q2 on, growth is likely to stabilize as policy measures kick in, especially enhanced fiscal spending; however, a significant acceleration of momentum is unlikely.
