Macro policy implementation will be crucial to watch this year. We continue to believe that the three leading sources of potential growth disappointments in 2018 are: 1) lower-than-expected infrastructure growth (our base case); 2) a collapse in Chinese export growth and trade surplus (not our base case); and 3) the impact of the debate over the property tax on the confidence of households in buying and holding property, which could lead to a drop in house sales. We believe that, together with expected lower land sales revenues, overall fiscal spending will be contractionary this year compared to 2017. We expect infrastructure investment growth to slip below 12% in 2018 - the lowest growth rate in more than a decade.
By March 2018 infrastructure investment had been 12.3% annualized in the first two months of the year. It collapsed to trough at -4.7% in July since when a mini-stimulus has been used to provide support.