In the view of Gerard Burg, Senior Economist – International, Group Economics at National Australia Bank (NAB), the Chinese authorities are poised to stimulate the economy amid looming US-China trade row.
Key Quotes:
“China’s policy makers are likely to boost domestic support in the wake of the deteriorating trade relationship with the United States.
The PBoC’s Governor suggested a range of measures in early June, including cutting interest rates, lowering the required reserve ratio and other monetary policy tools along with increased fiscal policy support. This domestic policy response remains the key driver for us to maintain our growth forecasts at 6.25% this year, 6% in 2020 and 5.8% in 2021.
Growth in industrial production slowed in May, down to 5.0% yoy (compared with 5.4% yoy in April). This was the slowest monthly increase since the January-February period of 2009 – the bottom of the Global Financial Crisis.
Growth in real investment fell in May – down to 3.8% yoy (from 4.9% previously). The slowing trend has been driven by private sector firms, while investment in manufacturing and infrastructure were particularly weak.
China’s trade surplus widened again in May (compared with a relatively narrow surplus in April), as exports rose and imports fell month-on-month. The United States accounts for the majority of China’s trade surplus.”
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