The latest indicators continue to suggest that growth momentum is waning in China. Both industrial profits (+16.2% YTD y/y in Jan-August after +17.1% in Jan-July) and revenue growth (+9.8% after +9.9%) have slowed. Business surveys in the manufacturing sector point to further deceleration in September. The official manufacturing PMI decreased to 50.8 in September (from 51.3 in August), while the Caixin (private survey) manufacturing index declined to 50.0 (from 50.6). The main components of both indicators decreased. In particular, new export orders continued to fall, suggesting that US protectionist measures are starting to bite. We expect the previously announced stimulus (for example, higher infrastructure spending and tax cuts) to begin having an impact from Q4 2018 onwards. This will help keep growth in a decent range of +6.6% in 2018 and +6.3% in 2019.
