Moderation in China’s Q4 growth strong enough to allow reforms to proceed

HONG KONG – China’s fourth quarter GDP growth was in line with expectations at 7.7% y/y, slowing from 7.8% in the previous quarter, although in sequential terms, the slowdown was more pronounced at 1.8% q/q sa from 2.2% q/q sa in Q3, according to official data. The outturn brings full-year growth to 7.7% for 2013.

This is the same level as in 2012, and ahead of the official growth target of 7.5% (which appears likely to be maintained in 2014, according to BBVA Bank).
“We view the outturn as encouraging, especially considering the worries earlier last year about a hard landing,” says BBVA. “In particular, growth momentum, which was boosted in 2013 by “mini” stimulus measures and public infrastructure investment, appears to be strong enough to provide comfort for the government in implementing reforms announced at the Third Plenum in November.
“We expect growth of 7.6% in 2014 as strengthening external demand offsets headwinds from new regulations and reforms aimed at curtailing financial risks from shadow banking, local government debt, rising housing prices, and overcapacity in some sectors. www.bbvaresearch.com (ATI).