China Economic Outlook. Third quarter 2019

The better-than-expected economic growth in the first half of 2019 seems transitory. The renewed trade war with the US in Q2 is likely to exert adverse effects on China’s economy over the medium-long term. Moreover, a number of domestic structural factors will continue to weigh on the growth.

Key points

• Key points:
• The renewed trade war with the US in Q2 is likely to exert adverse effects on China’s economy over the medium-long term. Moreover, a number of domestic structural factors will continue to weigh on the growth.
• The main source of uncertainties surrounding China’s economic prospect in 2H remains the unsettled trade war with the US.
• According to the development of the US-China trade dispute our base scenario assumes that the truce between these two giant economies can be maintained through the rest of the year.
• Some long-term damages to China’s economy have been made and appear to be irreversible regardless of whether a trade deal is to be signed.
• On the policy front, China’s authorities have already deployed a flurry of monetary and fiscal easing initiatives to offset domestic and external headwinds since the second half of 2018.

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