- China’s economy is slowing but not collapsing as the services sector holds up. A further slowing is likely in the short term, but policy stimulus is likely to see growth improve in the second half, giving 2019 growth of 6.2%.
- Concerns about China’s rapid debt growth are overstated given it reflects high (not low) savings.
- Chinese shares are cheap but expect short term volatility.
- Reasonable Chinese growth is a positive for the Australian economy. The housing downturn will dominate though, pushing the RBA to cut rates and this will see the $A fall further into the $US0.60s.