Deutsche Bank expects China's GDP growth to continue its recovery towards 8.6% in 2014, after accelerating to 7.8-7.9% yoy in 2H 2013 from 7.5% in 2Q.
The research house sees five major drivers for the recovery in 2014: (1) reduced overcapacity; (2) deregulation in sectors with massive under-capacity; (3) the effectiveness of the government's efforts to "reactivate money stock"; (4) rising external demand; and (5) a procyclical fiscal policy.
Deutsche Bank said 2014 will mark the beginning of a series of aggressive structural reforms that will enhance China's growth potential. In particular, we expects reforms to
boost private investment in sectors such as railway, new energy, environment, and health.
The house also expects monetary policy to remain stable at least in 1H 2014, and a possible shift towards a tightening bias in 2H.
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