ING Mark '21 Chinese GDP Forecast Lower, End Of '21 USD/CNY Call Higher

ING note that "widespread flooding, tough social-distancing measures at ports, chip shortages and far tighter regulation in some industries - these are all big challenges facing the Chinese economy right now. New and traditional infrastructure projects could provide a lifeline."

• "Combining the risks and the opportunities, we have scaled down our GDP growth forecasts for the second half of 2021. Chip shortages and Covid are the two main reasons. We expect GDP growth to slow to 4.5% Y/Y and 5.0% Y/Y in Q321 and Q421, respectively, with the full-year forecast of 8.9%, down from 9.2% back in July."
• "With weaker growth, we expect monetary policy in China to diverge from that of the US, resulting in a narrower interest rate spread. Following this, capital inflows could slow or even experience a small reversal. We forecast USD/CNY to reach CNY6.70 by the end of the year from the estimate of CNY6.45 made in July."