China’s growth not as robust as official data suggest

Although China's Q3 real GDP growth was reported at 6.9% y/y, it was likely weaker. Analysis suggests that economic activity started to deviate from official headline GDP numbers in early 2014, with the gap ranging from 50bp to 150bp. 

China's GDP during Q1-Q3 2015 may have only been 5.8-5.2% y/y, compared with official growth of close to 7.0%.  Factors such as overcapacity, weakness in both domestic and external demand, as well as local government financing issues remain the main constraints to a stabilisation in growth. 

"We forecast 2015 GDP growth at 6.8%. We still see China's transition following a bumpy road, hence, our below-consensus growth forecasts of 6.0% for 2016 and 5.8% for 2017", notes Barclays.