Banking & Finance

Growing pains

More hard landing talk?

As a question, it is proving a resilient one: is China’s economy facing a hard landing (see WiC108)?

HSBC’s strategy team thinks not.

While noting that plenty of investors now seem more concerned that there could be a hard landing ahead, HSBC remains more bullish.

“Our conclusion is that China can still achieve GDP growth of about 9% this year and next,” writes strategist Garry Evans. “If that is right, there should be many interesting buying opportunities among stocks that have overreacted to the recent jitters.”

Evans defines a hard landing as GDP growth of below 7%. And he doesn’t think that this scenario is likely, presenting data points like the sale of Mercedes cars (up 68% this year) and resilient oil demand (up 10.6% in the year so far) in support of his forecast.

In a separate report, HSBC’s China chief economist Qu Hongbin also looks at whether Beijing’s tightening measures could result in a more severe slowdown. Published on Wednesday this week, Qu interviews Wang Haifeng, director of a think-tank that advises China’s leading economic planning agency, the NDRC. And Wang doesn’t expect a hard landing ahead either. Instead, he predicts that economic growth will be “underpinned by resilient consumption demand” as well as the “construction of massive public housing” to “provide the necessary cushion to investment growth”. Like Evans, Wang forecasts GDP growth will exceed 9% this year.


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