SINGAPORE (Oct 5): Giant Japanese investment banking group Nomura today drastically cut its GDP growth forecasts for China to 5.8% for next year from 6.7% earlier forecast. Nomura still believes the world’s second largest economy will be able scrape through 6.8% growth this year based on data for the first nine months of year.

The Chinese economy is slowing far more sharply than anticipated, says Yang Zhao, Nomura’s Hong Kong-based China economist, in part because of faster-than-expected pace of economic rebalancing. China has been trying to remake itself from export-led manufacturing model to a domestic consumption-based model. “The main drag is slowing property investment growth, which may turn negative and in turn drag fixed asset investment growth down to single-digit levels in 2016,” Zhao says in report published this morning.

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