Barclays in yesterday's GDP data from China:
- Stronger-than-expected
- We raise our 2017-18 full-year forecasts by 20bp, to 6.7% and 6.3% respectively
Upward revisions reflect
- Better-than-expected growth in industrial output
- Sustained higher commodity prices have supported industrial profits
- Together with strong demand, this has driven inventory restocking
- Strong global PMIs
- Strong trade activity
- Better external demand amid a synchronised global recovery
- Domestic fixed asset investment and consumption have also surprised to the upside
Further:
- The March activity data points to a further and across-the-board improvement in economic activity
On macro policy ... fiscal:
- Maintain our view that the government will pursue a more proactive fiscal policy
- We believe the government has room and the resources to mobilise (quasi) fiscal measures, including policy banks, PPP projects, and infrastructure to support growth.
... monetary:
- A tightening bias will remain under the "prudent and neutral" monetary policy in 2017
- We think more hikes in some policy rates (OMO, SLF, MLF) might happen in the coming months to reduce to financial risks
- Against the backdrop of sustained growth recovery and tightened Fed policy
- However, we believe significant monetary tightening, in the form of benchmark interest rate hikes, remains unlikely given our full-year inflation forecast of 2.5% with risks to the downside due to larger-than-expected declines in food prices.
(bolding mine)