China: Waiting for the stimulus to take effect – Standard Chartered

According to analysts at Standard Chartered, China’s local sentiment has improved since October 2018 and the government is prioritising political, economic and social stability ahead of the 70th anniversary of the founding of the People’s Republic of China (PRC) on 1 October.

Key Quotes

“Generous policy support has been planned, and more is likely to be deployed if needed to maintain stability amid US-China trade tensions and the global slowdown. We believe this will help to contain downside risks this year.”

“Our meetings confirmed that fiscal policy is more expansionary than indicated by the headline budget deficit. Tax cuts and spending increases are expected to support growth, although the fiscal multiplier appears uncertain.”

“China’s growth may have bottomed out in Q1-2019. If Q2 data confirms a recovery, the government may adjust policy in July and save some fiscal firepower for a rainy day. We maintain our above-consensus annual growth forecast of 6.4% for 2019.”