Looking ahead, economic growth is expected to decelerate. This reflects China’s more mature economic cycle and the impact of previous economic reforms, as well as the tit-for-tat trade war with the United States and the cooling housing market. However, a looser fiscal stance and a more accommodative monetary policy should cushion the slowdown. FocusEconomics panelists see the economy growing 6.3% in 2019, which is unchanged from last month’s forecast. In 2020 the economy is seen expanding 6.1%.
The People’s Bank of China (PBOC) uses a complex system to implement monetary policy, including the use of key benchmark rates, open market operations and reserve requirement ratios. On 6 October, the Bank announced a cut of 100 basis points to the reserve requirement ratio for most banks, which will release around CNY 750 billion. The move is intended to spur credit growth amid softening economic conditions. Panelists expect that the one-year deposit and lending rates to close 2019 at 1.52% and 4.32% respectively and 2020 at 1.58% and 4.33%
Export growth surges in September despite escalating U.S.-China trade tensions Export growth accelerated from 9.8% in August to 14.5% in September. The reading surprised market analysts as they had expected a slowdown to an 8.9% rise. The surge in export growth likely reflected a hike of the export tax rebate rates for selected products effective 15 September as well as front-loading shipments to the United States before the implementation of additional tariffs on USD 200 billion of Chinese products by the United States on 25 September. Although imports expanded at double-digit figures for the seventh consecutive month, import growth softened from 19.9% in August to 14.3% in September. The print was below the 15.0% rise that market analysts had expected and reflected weaker domestic demand. The trade surplus consequently rose from USD 28.5 billion in September 2017 to USD 31.7 billion in September 2018 (August 2018: USD 27.9 billion). The 12-month moving sum of the trade surplus increased from USD 350 billion in August to USD 355 billion in September. Our panelists forecast that exports will expand 5.7% in 2019 and imports will rise 8.0%, bringing the trade surplus to USD 316 billion. In 2020, FocusEconomics panelists expect exports will expand 2.9%, while imports will rise 5.8%, bringing down the trade surplus to USD 258 billion
The People’s Bank of China (PBOC) uses a complex system to implement monetary policy, including the use of key benchmark rates, open market operations and reserve requirement ratios. On 6 October, the Bank announced a cut of 100 basis points to the reserve requirement ratio for most banks, which will release around CNY 750 billion. The move is intended to spur credit growth amid softening economic conditions. Panelists expect that the one-year deposit and lending rates to close 2019 at 1.52% and 4.32% respectively and 2020 at 1.58% and 4.33%
Export growth surges in September despite escalating U.S.-China trade tensions Export growth accelerated from 9.8% in August to 14.5% in September. The reading surprised market analysts as they had expected a slowdown to an 8.9% rise. The surge in export growth likely reflected a hike of the export tax rebate rates for selected products effective 15 September as well as front-loading shipments to the United States before the implementation of additional tariffs on USD 200 billion of Chinese products by the United States on 25 September. Although imports expanded at double-digit figures for the seventh consecutive month, import growth softened from 19.9% in August to 14.3% in September. The print was below the 15.0% rise that market analysts had expected and reflected weaker domestic demand. The trade surplus consequently rose from USD 28.5 billion in September 2017 to USD 31.7 billion in September 2018 (August 2018: USD 27.9 billion). The 12-month moving sum of the trade surplus increased from USD 350 billion in August to USD 355 billion in September. Our panelists forecast that exports will expand 5.7% in 2019 and imports will rise 8.0%, bringing the trade surplus to USD 316 billion. In 2020, FocusEconomics panelists expect exports will expand 2.9%, while imports will rise 5.8%, bringing down the trade surplus to USD 258 billion
