China is set to announce GDP figures for 2018’s fourth quarter on Monday. Economists surveyed by Reuters see growth having likely slowed to 6.4 percent against the prior year’s fourth quarter. Official growth numbers — the veracity of which outside experts have long expressed skepticism — came in at 6.5 percent for the third quarter on a year-over-year basis.
While Beijing reportedly planned to set its growth target to a 6 to 6.5 percent range for 2019, any slight slide is unlikely to intensify, experts said.
“Economic growth should stabilize as the government releases additional stimulus, including corporate tax cuts, credit easing, infrastructure investment, and looser real estate rules in lower-tier cities,” IHS Markit said Friday in a note.
Ken Peng, investment strategist at Citi Private Bank in Hong Kong, is also optimistic.
“I think, ultimately, we’ll see less worries about trade tensions this year,” Peng told reporters Thursday.
But even with a deal, he said, Chinese data in coming months, such as exports, will likely remain under pressure — a legacy of the early stages of the trade war.
“We think this negativity, a lot of it, is coming from the payback for the front-loading of exports ahead of tariffs last year,” Peng said.
But China’s increased pump-priming will ease the transition, he added.
“Liquidity has turned from targeted easing to broad general easing and the size is bigger,” Peng said, adding that lower business taxes are likely to be the most important factor.
“As we move into the second quarter, I think the effects of stimulus will start to more than offset the drags from trade and other slowdown(s),” he said.
Alicia Garcia-Herrero, chief economist for Asia Pacific at French investment bank Natixis, also emphasized the importance of stimulus, but stressed it comes at a cost.
“China has been trying very hard to put some grease in the engine,” Garcia-Herrero said in a talk to the Dutch Chamber of Commerce in Hong Kong on Wednesday.
And she said that, while stimulus wasn’t effective last year, it’s likely to work this year as authorities take stronger measures such as forcing banks to lower lending rates for small- and medium-sized companies.
“This is great for growth but this is worrisome in terms of moving backwards in China’s financial liberalization because you’re going back to more targets,” she said.
from Update News Zone http://bit.ly/2RzlhEh
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