Last, but not least, Chinese growth may slow, but this is a welcome development since recent very strong growth was exacerbating disequilibria in China and world-wide. The authorities seem to have realized that growth close to 10-12%, as recorded in the last few quarters, intensifies inflationary pressures and encourages investments in uneconomical projects, which have no chance to service their debt.
It is hoped that the move will help to increase potential output growth, narrow the output gap, and eventually bring deflation to an end.