2018 Outlook: 2018 growth may moderate, but reforms and innovation bode well for the longer term in China

For 2018, we are expecting a moderation of growth. That said, there are several encouraging signs that may support better quality growth in the long term.

Dec 1, 2017 | Mike Shiao

Chinese equities caught investors by surprise in 2017 with a strong rally. Contrary to the pessimism over the past few years, investors have turned upbeat toward China, and for good reason: Economic data in general exceeded expectations, and we have seen broad-based earnings growth.

For 2018, we are expecting a moderation of growth. That said, there are several encouraging signs that are worth monitoring. In our view, these will be supportive for a transition to better quality growth:

• Progress in deleveraging
• Supply-side and state-owned enterprise (SOE) reforms
• Industrial innovation
• Structural southbound liquidity
• MSCI A-share inclusion

 

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