China Economic Outlook. Fourth Quarter 2019

The Q3 GDP growth slowed to 6% y/y, the lowest growth rate for the past three decades. The prospect of China’s economy hinges on the development of trade talks with the US at the current stage. The two sides recently tried to pursue a partial agreement first and leave the thorny part of negotiation to the next phases.

Key points

• Key points:
• Growth slowdown continued in Q3. The Q3 GDP growth slowed to 6% y/y, the lowest growth rate for the past three decades.
• The unsettled trade war with the US is still the prime risk of economic growth.
• The trade war, together with the domestic structural obstacles weigh on the growth in the medium to long term.
• We maintain our 2019 GDP forecast at 6% with some upside risk due to the Q3 outturns. We also further lower 2020 GDP forecast to 5.6% from 5.8% previously.
• Chinese authorities, except for pushing forward the trade negotiation with US, are expected to implement more easing monetary and fiscal measures as well as press ahead structural reforms to stimulate domestic demand.

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