Policy change expected in 2017Q2

With annual GDP growth on track to achieve the target range for the year, we believe the government will continue its control on broad credit growth and tightening of the property market in the next two quarters.

Economic activities, especially investment, showed signs of picking up in September. This was in part driven by the recovery of private investment, whose year-to-date growth improved to 2.5 percent from 2.1 percent in Jan-Aug.

With stable growth in the third quarter and the economy on track to achieve the annual growth tar-get, we anticipate the government being more comfortable with its current policy moves in the coming quarters, including control on broad credit growth and property market tightening.

The government will likely loosen policy again in the second quarter of 2017 when growth starts to face pressure from the property market adjustment. We expect GDP growth of 6.4 percent year-on-year in the fourth quarter, 6.2 percent in the first quarter of next year and 6.3 percent in the second.

Zhang Zhiwei, chief economist and head of equity strategy for China, Deutsche Bank