Recent trends across China’s monthly economic indicators, including today’s June credit data, suggests a flat-to-slightly-down 2Q GDP print Sunday night. Consensus is at 7.5%, which has trended down from an estimate of 8.2% at the start of the 2nd quarter.
Another sharp immediate-term relief rally from oversold lows could occur Monday if the numbers are doctored up to come in ahead of bombed-out consensus expectations.
Looking out further, however, Finance Minster Lou Jiwei’s commentary yesterday afternoon all but confirms our TREND and TAIL duration expectations for the Chinese economy. The fact that the sell-side and Western financial media outlets are overly focused on the 2013 GDP growth target (is it 7% or 7.5%?) reminds us that consensus doesn’t understand the secular nature of China’s downshifting economy.
Like Lou Jiwei, we also want to emphasize that structural economic adjustment is a painful process.