VIEW: Goldman Sachs: A Policy-Driven, Partial, And Temporary Stagflation

Goldman Sachs note that "unlike the stagflation of the 1970s, the very low growth and high inflation in China in Q3 were policy-driven (e.g., property tightening and decarbonization), partial (e.g., PPI only), and likely temporary (e.g., policies have already been adjusted to boost coal production and accelerate fiscal spending in Q4). We expect a sequential pickup in growth in Q4, with year-over-year GDP growth to drop to 3.1%. However, the long-term policy direction such as property deleveraging remains unchanged as evidenced by the latest news on starting property tax trials in select cities. We revise down our 2022 growth forecast to 5.2% from 5.6% previously."