Investors must look to China's policymakers to support growth now

While the Chinese economy is undergoing a structural slowdown, it would be incorrect to translate this into an assumption for an imminent 'hard landing' given that policy makers still have significant flexibility to support growth.

Interest rates remain well above zero at 4.4% leaving plenty of room for cuts - a starkly different position to that in the developed world. Although some have concerns that further interest rate cuts will only increase pressure on the currency, China's still extremely healthy level of foreign exchange reserves at $3.3tn are sufficient to defend the country's new managed float regime for a long while yet. The high bank reserve requirement ratio can meanwhile also be reduced substantially to offset reduced domestic liquidity as a result of capital outflows. Fears over Chinese renmin...