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What’s new in China’s 2019 outlook?

Chi Lo, Chi Time

Kam Wei NG
 

Let us consider the four GDP components – consumption (C), investment (I), government expenditure (G) and net exports (NX). The outlook for NX is clouded by the Sino-US trade conflict.

 

NX: TRADE WAR UNCERTAINTY

Do not expect any contribution to growth.

 

G: FISCAL SUPPORT VIA TAX CUTS

The stimulus from tax cuts could amount to 0.9% – 1.6% of GDP, with VAT cuts in focus.

 

I: INFRASTRUCTURE AND PRIVATE INVESTMENT RECOVERY

Relaxation of the local governments’ funding constraint will boost infrastructure investment, while a policy-driven credit support may help private sector “animal spirits” to recover.

 

C: CONSUMPTION TO BENEFIT

Consumption upgrade to continue.

 

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