The Chinese economy is likely to re-accelerate in the next two quarters. One of the reasons is that China's recent economic slowdown has a lot to do with pollution control.
Beijing time on March 24th news, China's February economic data was significantly lower than expected, triggering market concerns about China's sharp slowdown in growth, emerging market stocks have a large outflow. However, Goldman Sachs believes that the Chinese economy is likely to accelerate again in the next two quarters. One of the reasons is that China's recent economic slowdown has a lot to do with pollution control. The chart below compares the industrial output of Hebei, China's national and heavy industry provinces, and clearly shows the impact of pollution control on growth.
In the report, Goldman Sachs proposed three reasons for China's economic growth to accelerate again:
1. The negative impact of anti-corruption and pollution control measures on the economy will gradually decline.
2. Policy support for cyclical needs. These include policy adjustments such as relaxation of the financial environment, deregulation (such as allowing private capital to participate more in previously restricted areas), and accelerated implementation of planned fiscal expenditure projects and new fiscal measures.
3. Improvements in trade. Export growth is likely to accelerate as external demand picks up in the second half of the year, while weak domestic demand in the first quarter may lead to at least a temporary decline in imports.
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