Goldman Sachs On "Common Prosperity"

Goldman Sachs note that "on the meaning of "common prosperity", our sense of recent messaging is that both "common" (which is about more equal distribution of income, wealth and opportunities) and "prosperity" (which is about increasing total output) are important. However, as the government recognises, redistribution policies are difficult and complex. Thus, policy instruments such as property taxes are unlikely to be implemented at the national level hastily."

• "While in most cases the underlying motivations for new regulations are straightforward, we think communication and coordination are particularly important given the lack of understanding of China's policy-making process among investors and the many policy objectives pursued by the government simultaneously. In the absence of strong coordination, we could see continued growth headwinds."
• "In this "micro takes and macro gives" environment, monetary and fiscal policy will need to ease to counterbalance the drags from sector-level regulations, although the easing is likely to be measured. August data are likely to be weak, but September activity should rebound somewhat as restrictions ease with the recent Delta variant outbreak behind us. And Q4 growth should be strong on a sequential (not year-over-year) basis with macro policy support."