📝More Is Needed For Chine to Achieve 5% Target: J.P. Morgan

Overall, policy adjustment has been gradual and calibrated. More is needed to achieve the 5% growth target, beyond what we have priced in our baseline assumption, such as: (1) additional fiscal support from the central government (beyond the March fiscal budget) to mitigate fiscal stresses by local governments or boost domestic demand; (2) larger-step policy rate cuts; (3) a comprehensive and forceful housing stabilization plan, e.g. a large-scale real estate stability fund or a central government (or central bank) led funding package to support developers, housing de-stocking and public housing developments.

What is also important is policy re-direction for balanced support between consumption and investment, between service and manufacturing upgrade. Interesting cases for such changes include the more benign attitude in gaming and education tutorial sectors, and news about the introduction of mortgage refinancing. Such policy re-direction, if expanded and perceived as sustainable, can restore market confidence and free up the potential of the Chinese economy - J.P. Morgan