Nomura Has Uber Bearish China Forecast

CN Gold:野村预计明年中国GDP真实增速为3.5%
Nomura Forex Jens Nordvig, general manager of research directors report that the bank is now on China's GDP growth is expected at the low end, it is expected to only 5.8% GDP growth next year, but even so let everyone feel low data may also be compared High actual level, because Nomura forecast for investment in infrastructure may be biased optimistic. That is, in the next year China's infrastructure spending grew about 20% of GDP is expected to grow 5.8 percent premise.

However, if infrastructure spending did not reach the level of about 20 percent of China's economy will be like?

Report that infrastructure may indeed have less than expected, growth has plummeted since 2009. And there are also short-term lack of attractive items such risks. If the overall growth of China's investment next year unchanged this year, assuming that other Nomura projected expenditure unchanged China, then China next year GDP will grow by only about 3.5%.
To review, fixed asset investment slumped to a 7% yoy rate in September, from the 10% rate of the prior few months. The trend points to fixed asset investment going lower, not higher.

If you assume China hasn't rebalanced much, and you look back at old models of GDP growth (old as in a couple of years ago), GDP should already be much lower. From June of last year:
The IMF once estimated that a 1% decline in China’s real estate investment would shave about 0.1% off China’s real GDP within the first year. And so a 7.5ppt deceleration in real estate investment growth would drag down GDP growth by about 0.75ppt.
Real estate investment growth was down 17% since then, or 1.7% of GDP growth from June 2014. Maybe the model is junk, but actually most economist think real estate in much more important. Also from that post:
About 60% of China's manufacturing and financing activities are related to the property sector, China's state media quoted a senior government economist as saying Monday.
The GDP number might be artificial, but the underlying data points (electricity, real estate investment, fixed asset investment) aren't being massaged and all paint a clear picture: slowdown. NBS isn't lying about GDP and lying about investment because they wouldn't put out such negative sub numbers. The investment figures are real and represent a real slowdown in the economy. Copper, iron ore, oil, steel and other commodities say the same thing: slowdown. To an extent the GDP figure is irrelevant because the oil market, outside of speculation, doesn't care about GDP numbers, it cares about how many people show up to buy and sell today. It matches buyers to sellers and that's the price. For markets that lack price discovery, such as currency and debt markets, you have Shrodinger's Cat in the box with the CCP and PBoC keeping you from opening the lid.

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