Emerging industries won’t replace property

The leadership's recent promotion of "new-type industrialisation" has led to suggestions that emerging new manufacturing sectors like green technology could take the place of property as drivers of China's economic growth and employment. Many of these sectors have been growing rapidly for years but they are too small to make up for property's gargantuan role and, even to partially offset the property slowdown, they would have to grow faster still. In any case, it is a mistake to think that China's industrial policies are primarily designed to maximise GDP growth.

Meanwhile, the People's Bank has been working hard to stabilise the renminbi ahead of the holiday that began today in China and runs through next week. We think it may soon dust off an old tool to boost lending without having to cut rates aggressively.