Research Team at RBS, notes that China has seen an unprecedented divergence, with real growth stagnating while nominal growth recovers.

Key Quotes

“Our China economist Harrison Hu believes nominal growth has and will become more important than real growth in guiding China’s macro policy. First, nominal growth could better reflect cyclical swings, which determine the timing and magnitude of policy response. Second, nominal growth is more important for the authorities’ policy goal of stabilizing China’s debt cycle. The intact nominal growth upturn thus supports our call for 2013-14 like ‘mini supports’ but NO full-blown stimulus in the coming year.”