Basic overview - China slowing; expect GDP to come in the 6.0%-6.5% range in 2019; requires striking a balance between avoiding a slide in growth against the risk of continued debt buildup (This opinion is in the upper-end of most forecasts and would entail continued credit expansion. Only 3.0%-3.5% of their growth is sustainable based on current productivity trends. One big reason for keeping GDP in the lower-6% range is because of the government’s plan to double income from 2010 to 2020. If that is a binding commitment, that means targeted GDP growth of 6.1% in 2019 and 2020. Also, policymakers are motivated to avoid a large rate of change in the pace at which China grows.) - Main concerns are the inadequate role of private enterprises in the Chinese economy in addition to overreliance on debt to grow the economy - Consumption and export growth are likely to slow, leaving fixed investment (e.g., infrastructure) to have an outsized role - CPI inflation will likely increase, but remain tolerable - Monetary policy likely to remain dovish and USD/CNY likely to breach 7.0 unless there are material positive developments in the trade relationship with the US - China’s economy still requires structural economic reforms – e.g., boosting the social safety net to bolster consumption over the long run, excessive role of state-owned enterprises (crowds out financing for private corporations), capital account liberalization to boost the global attractiveness of China’s capital markets (free-floating the yuan would be the first step) +++Charts++++++++++++++++++++++++++++++++++++++++++++++++