Growth no longer accelerating

We’ve revised up our 2017 growth forecast for China following the recent run of strong data. At the same time though, the latest figures on our China Activity Proxy (CAP) suggest that the acceleration that has been underway since this time last year has finally run out of steam. We expect growth to slow over coming quarters. We estimate that output increased by 6.6% y/y during the first two months of the year. (We look at January and February together to avoid distortions around Chinese New Year.) Momentum appears to have softened slightly – growth on our figures peaked at 6.8% in December after accelerating for eight consecutive months – but activity remains strong. The official GDP data put growth in Q4 at 6.8%.