China: Upgrading our 2012 GDP Growth Forecast to
9.0%
Our out-of-consensus call is based on our view that the
slow recovery is conducive to more effective policy
easing, most of which will likely come in small
installments in a low-profile fashion. While the policy
untightening has not translated the looser liquidity
conditions in the interbank market to the real economy
yet, we believe the government is working on easing
financial conditions for the real economy and delivering
more demand-supportive initiatives. We also expect
them to support the loan demand by lowering the
benchmark interest rate by 25bps at least once this year.
As a result, a stronger rebound in growth should come in
2Q-3Q2012, in our view.