This morning the Chinese Istat communicated data on GDP growth, which slowed down but not too much: from a rate of +7,7% in the first quarter of 2013 on an annual basis (and from 7,8% for the whole of 2012 ) we moved to +7,5% in the second. As can be seen, the slowdown is modest and is also desirable, because, after years and years of double-digit growth, the Chinese economy risked overheating. The current slowdown is therefore the premise for more sustainable growth.
Investments continue to be the most dynamic component of demand, up 20% year-over-year. The slowdown is mainly due to a more prudent monetary policy, which aims to avoid credit excesses. The money market problems that led to a spike in short-term rates last week were likely due to a misreading of credit data related to an accounting gap in calculating a particular loan segment. But the intention of the monetary authorities remains to put the reins on a shadow banking system which is fomenting credit expansion beyond prudential limits and threatening speculative bubbles.
