Knowing that Beijing has not yet given up on economic growth, it is not surprising to see that its stance on fiscal reform is softening for the moment.
Beijing's top priority has again shifted (temporarily) from reform to growth. Both infrastructure investment and credit growth should start to bottom out soon, which supports our call for growth stabilisation in H2.
"However, looking beyond six months, we reckon that reform will gain renewed attention around the turn of the year when the growth target looks within the reach. The current approach is born of pragmatism and is not a permanent setback for reform." - notes Societe Generale
