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Data Flash is a brief interpretive summary of China’s official monthly economic data release.
Data from February reaffirms that the growth momentum of 2H 2016 is carrying into early 2017. Our Leading Economic Indicator (LEI) suggests that this momentum will continue for the coming several months. However, strengthened administrative restrictions to tamp down housing bubbles, and tightening monetary measures to contain money market speculators, are likely to deflate growth momentum by mid-year. Official rhetoric and action is now very focused on financial sector risk mitigation, and the authorities have signaled clearly that lower growth is acceptable as long as employment can be maintained. Reduced policy support for growth is one of the major reasons we anticipate aggregate growth to resume its slow descent path later in 2017. The better-than-expected demand conditions that many MNCs have been experiencing these last 3+ quarters is unlikely to persist much longer.