China: Accept the Landing
There is apparently a saying in the UK’s Parachute Regiment that after you have jumped out of the plane you simply have to accept whatever landing you get. While we might hesitate to liken China's great credit boom of 2009-2014 as being akin to jumping out of a plane – although there certainly was an element of there being a leap into the unknown – it is clear that China’s economy is landing at present. As to whether the landing will be soft or hard, we are minded to side with George Soros’s comments at Davos, "namely I do not so much expect a hard landing in China, I am observing it". We estimate that China's industrial complex is in a recession and that, despite 5% or more service sector growth, aggregate GDP growth is currently around 3.5%. Potentially, this rate may go lower in 2016 and this will definitely count as a hard landing for the PRC.
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