“The Chinese government has turned very serious about fighting pollution,” Yao Wei, chief China economist at Societe General SA was quoted as saying this week by Bloomberg.
It will be “more than a transitory objective for the current leadership. Modestly slower growth will be a necessary sacrifice for maintaining social stability over the medium term.”
The government will likely tolerate a growth rate below 6.5% for next year and beyond, in Yao’s estimation.
She said that tougher environmental inspections and production cuts to curb emissions will also support profits of large industrial companies as producer prices rise. Yao added the central government’s efforts will give a “notable supply shock” to the economy.