Morgan Stanley Has A Contrarian Prediction For China

beijing china

Photo: Wikimedia Commons

This weekend’s PMI reports aside, the overwhelming sentiment towards China this year is one of pessimism, as a hard landing is seen as a distinct possibility.But not everyone is pessimistic.

In a report put out in the middle of last week, Morgan Stanley’s┬áHelen Qiao actually raised her firm’s 2012 China GDP forecast from 8.5% to 9.0%.

We break down the key points here:

  • Already the China has been easing policy all over the place to stimulate the economy, but so far it’s been relatively ineffective.
  • However, there’s more the PBOC can do on the monetary front, including rate cuts, to goose lending. Specifically, Morgan Stanley is calling for a 25 basis point cut to the benchmark lending rate.
  • Furthermore, expect to see the resumption of government infrastructure projects.
  • There’s growing evidence that after strong attempts to cool the property market, that pro-real estate measures will be put in place, specifically with the aim of supporting first-time home buyers. In early March, the heads of the 5 biggest bnaks were called together for a meeting on facilitating homebuying.
  • Fixed Asset Investment, centered on technology, utilities, and housing will grow 21% this year, vs. previous estimates of just over 10%.

SEE ALSO: Why the next 24 hours will be critical for the global economy >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Tagged In

china moneygame-us