Goldman: China Reflation Will Not Lead To Economic Growth

We are seeing reflation in China but will it lead to any real growth? Probably not, says one big bank. The reflation theme has been a key driver of equity market returns over the past six months. Nowhere is this trend more apparent than in China where the industrial sector has been reflating strongly, with PPI running at over 10% on an annualized basis. Broadly speaking, this could be good news for upstream industries, where pricing power and profits have been sharply boosted by restrained supply according to Goldman Sachs’ Asian economics team led by MK Tang. In a research…