China slowdown fears exaggerated: economy.

LEADING China analysts are warning against exaggerated fears of a rapid slowdown, which have begun spooking Western markets.

Moody's is forecasting "continued growth in regional demand" for steel from the Asia-Pacific region broadly, "particularly from China".
China economists Liu Li-gang and Zhou Hao at ANZ Bank said: "China's economy will continue to expand, but at a moderated pace."
They said their own Real Activity Index "tracks overall economic performance far more reliably than sentiment indicators such as the Purchasing Managers' Indices".
In June, China's National Bureau of Statistics' and HSBC's PMIs fell. But, the ANZ economists said, "the risk of a large correction in the property market is low", with mortgage costs modest and underlying demand strong because of urbanisation.
Even after the fiscal stimulus program ended this year, large infrastructure projects would remain hungry for inputs, since they took three to five years to complete.
Their index, they said, showed that the drivers of economic growth were investment, retail sales, industrial production and exports. They predicted that the rate of growth would slow, but only to its potential of 9.5 per cent.
They headline their new report "It's a moderation, stupid!"
Morgan Stanley Asia chairman Stephen Roach welcomed such a moderation as "much more sustainable than the overheated growth rate" of the first quarter, and given higher inflation.
Moody's vice-president Chris Park said: "China will continue to play a decisive role in the prospects for the steel sector given the country's robust economic growth and its status as the largest consumer of steel.
"Despite a considerable year-on-year slowdown in demand growth due to monetary and fiscal tightening, China's industry-wide utilisation is likely to remain firm over the near to medium term in view of the expected slowdown in capacity growth."
Any unexpected weakness in China's economy would change the fortunes of the steel sector, he said, but "we don't expect anything untoward" in the near term.
"Our central scenario for China's economy assumes robust gross domestic product growth over the next couple of years."
Macquarie Equities Research said of the correction of Shanghai's dominant A shares, down 8.4 per cent in June and 29.4 per cent this year, that "local equity entry levels are already decent, in our view."
The balance of medium-term risks was "skewing towards the upside", it said. The headline of its latest China shares monitor is: "Less fraught than meets the eye".