China: Government stimulus to fill GDP growth gap – ING

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Iris Pang, economist at ING, suggests that in their view, China’s trade activities will need to bounce back considerably to avoid more fiscal stimulus and achieve above 6% GDP growth.

Key Quotes

“Depreciating the yuan won’t help exporters who are concerned about 25% tariffs, as such a large spike in tariffs will mean they forego export orders altogether, and then the exchange rate movements will no longer be a concern for them.”

“Therefore, China is likely to rely on government stimulus measures to fill the gap of loss of export activities, which means infrastructure investments and related manufacturing activities will have to continue to support GDP growth to prevent it falling below the 6% lower bound target set by the government.”

 

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