China: Zhou Baffles China Watchers With Hints on 3Q17 Growth Surprise

  • Expansion may accelerate in 2H17 to 7%, Zhou said 15 Oct 17 on a panel in Washington. Such growth would upend the consensus view that’s formed around China’s growth path in 2017 — a strong 1H17 followed by a moderate cooling in 2H17.
  • Whether it’s political spin or that analysts have missed a real uptick, 6.9% or faster for 3Q17 would be a big surprise.
  • The central bank later released a summary of Zhou’s remarks. “In the past few years China’s economic growth has been slowing down, from previously higher than 10% to about 8% around 2012, then down to 6.7% in 2016,” he said, according to the statement. “In 2017, the momentum of economic growth has been recovering. 1H17 GDP growth was 6.9%, and 2H17 GDP growth is expected to achieve 7%.”
  • Zhou warned about the buildup of leverage, saying corporate debt is too high and that there’s no clear fiscal mechanism to restrain local governments. Those characterizations may help explain why his growth expectation appears to exceed that of most economists.

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