What’s new in China’s 2019 outlook?
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.
Please send an email to AMAPAC.Marketing@bnpparibas.com if you would like to receive the full report.
China’s opening-up of its bond market – the third largest in the world – to foreign investors marks a turning point. It should allow investors to access a broad range of new instruments, possibly index products and bond ETFs, and boost their currently modest presence in this market.
The economic relationship between China and the US will be central to the global economy for years to come.
In a world striving for greater sustainability, investment in coal – be it mining or power generation – should be much more selective, hence our new coal investment policy. Also in this issue: how to navigate markets as they swing between the impact of news on the fundamentals and adjustments in central bank liquidity; what to make of the trends in US inflation; and our assessment of the relations and economies of China and the US.