Expect China to grow around 7.5% this year: JPMorgan AMC

China's official factory purchasing managers' index fell to 49.2 in August from 50.1 in July.

In an interview to CNBC-TV18, Geoff Lewis, executive director of JPMorgan AMC says the additional weakness that was seen in the data, with industrial value added dropping from 9% to just under 9% year-on-year (YoY), is relatively still marginal. "I do not think this particular data has changed the picture very much," he adds.

According to him, Chinese authorities are being cautious. "They know that they over-stimulated last time, they do not want to reignite the property boom. There is a sign of the property market perking up again. So, I think they are taking a fairly incremental cautious attitude. That is by no means insensible," he asserts.

He sees China’s growth being revised down from 8% to 7.5%.

Below is the edited transcript of his interview on CNBC-TV18.

Q: What do you make of the Chinese data? How quickly is the Chinese economy deteriorated?

A: I think the data is telling us that there is negative shock from external demand, from the sharp drop off in exports to Europe. It is not so far being compensated by a pick up in fiscal stimulus. So, nevertheless, I think the additional weakness that we saw in the data with industrial value added dropping from 9% to just under 9% year-on-year (YoY) is relatively still marginal. So, I do not think this particular data has changed the picture very much.

We did see also over the weekend the announcement of more infrastructure projects that are going to be accelerated. So, it seems that the Chinese authorities are responding to the weakness in the data. They are increasing fiscal stimulus a little bit at the margin. It is just going to take time for this to play out.

Q: You have taken a milder view of that 8.9% growth figure for industrial production, is that how you feel about the trade data as well? Do you believe this USD 157 billion series of infrastructure investment announcements are going to be enough in a sense to help lift, to some degree, the domestic economy?

A: That is a good question. I think ultimately Chinese authorities do have the scope on the fiscal and the monetary side to ease policy, should the economy take a significant turn for the worst. At the moment, they don’t seem to be in a great hurry to do that. But the data has not weakened dramatically. It is still consistent with GDP growth troughing out around 7.5%.

I think they are being cautious. They know that they over-stimulated last time, they do not want to reignite the property boom. There is a sign of the property market perking up again. So, I think they are taking a fairly incremental cautious attitude. That is by no means insensible.

For complete interview, watch the video.