The Chinese economy grew by 6.9% in Q3 15, which was a tad better than expected, given the recent raft of disappointing data and news out of the Middle Kingdom.
However, the figures conceal a gradual shift in demand from the manufacturing to the service sector. So while growth looks fine on the surface, commodity prices will still suffer, including the prices of oil and industrial metals. This is because China's consumption of commodities in part depends on the level of activity in manufacturing industry - which is slowing. Nevertheless, growth of the economy is seen as being sufficiently robust to dissuade Chinese policymakers from rushing to ease economic policy.
"Following the latest rate cut, interest rates are likely to be kept on hold so long as the risk of a pronounced slowdown does not increase sharply. On the other hand, the bank reserve requirements is likely to be reduced by a further 0.50 percentage points", says Danske Bank.
