Photo: Steve Webel via Flickr >
Everyone has been making a big stink about the unseasonably warm winter the U.S. has just experienced. However, this was not a global phenomenon. In fact, according to Ting Lu, Bank of America’s top China economist, the world’s second largest economy experienced quite the opposite.
From a new note to Bank of America’s clients:
“This past winter was the coldest in 27 years, and Lu expects a natural rebound in coming months as weather turns normal”
This was the first of six reasons why Lu believes China’s economy will accelerate in Q2. Here are the other five:
- Political disturbance in 1Q deflected Beijing’s focus on the economy. With the aggressive challenger out of the game, both outgoing and incoming policymakers can refocus on delivering stable growth to ensure a stable leadership transition.
- With robust fixed-asset investment demand, the stabilised situation in Europe and China’s own policy easing, Lu thinks the previous destocking is over.
- Home sales rebounded in March as developers cut prices and banks cut mortgage rates.
- Credit growth has bottomed out due to policy easing that started in October 2011.
- China’s potential growth is above 8.1% and demand this year is still robust. Even property FAI could still be quite stable due to strong presales in past years and more spending on social housing.