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Michael Buchanan

michael.buchanan@gs.com

+852 2978 1802

Goohoon Kwon

goohoon.kwon@gs.com

+822 3788 1775

Tushar Poddar

tushar.poddar@gs.com

+91 22 6616 9042

Enoch Fung

enoch.fung@gs.com

+852 2978 0784

Helen (Hong) Qiao

helen.qiao@gs.com

+852 2978 1630

Yu Song

yu.song@gs.com

+852 2978 1260

Mark Tan

mark.tan@gs.com

+852 2978 2676

Pranjul Bhandari

pranjul.bhandari@gs.com

+91 22 6616 9169

Shirla Sum

shirla.sum@gs.com

+852 2978 6634

Fiona Lake (Global Markets)

fiona.lake@gs.com

+852 2978 6088

Can growth recover before China rebalances?

The Chinese economy is experiencing its sharpest slowdown in 30 years, as industrial production growth drops on the back of weaker external demand and real estate investment.

We analyze current industrial structures, inventory levels and exposure to external demand to see what has changed in China’s ability to weather the global economic crisis this time, compared with the previous downturns in 1998 and 2001. We believe the Chinese economy is in a better position to avoid a hard landing in the short term, but will need to rotate the growth driver to be more domestic-demand driven for sustainable growth close to the trend level of 9.5%-10% year on year over the medium to long term. Policy stimuli will likely boost growth in the next few quarters, but eventually will have to shift towards rebalancing the economic structure over the long term.