...China's Macro Outlook: A Race Between Reform and Systemic Risks GDP data released on 20 January 2015 indicated that China's economy expanded 7.4% in 2014, down from 7.7% in 2013 and marginally below the authorities' 7.5% target for the year. The slowdown comes after a tightening in monetary and credit conditions that began in 2013 amid official concern over the risks to stability from a rapid build-up of debt in the economy. The tightening in credit policy was partly reversed in 2014 (including a rate cut on November 21) as evidence mounted that activity was slowing sharply. The Purchasing Manager Index's employment sub-indices moved into contractionary territory in 2014 (Figure 2), the first time this happened for more than two months since the October 2008-March 2009 period. The ongoing correction in the residential real estate market is contributing significantly to the slowdown; investment in that sector has slowed to a record rate, cutting overall fixed-asset investment (Figure 3)....
