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CHINA-ECONOMY
China to step up support as economy slows further: ADB
BEIJING, Sept 25, 2019 (BSS/AFP) – China’s economic growth will ease
further next year due to slowing exports and US trade tensions, the Asian
Development Bank warned Wednesday as it revised downwards its GDP
predictions.
The bank is now forecasting 6.2 percent growth in 2019 and 6.0 percent in
2020, a downgrade on its April predictions.
“Domestic consumption will be the main driver of growth going forward with
the main downside risk stemming from a potential intensification of the trade
conflict with the US,” said ADB chief economist Yasuyuki Sawada at the launch
of the latest outlook report.
More supportive monetary and fiscal support are likely from the government
in the coming years, said the ADB.
Earlier this month the State Council, China’s cabinet, announced a total
of 2.15 trillion yuan ($302 billion) of new special bond issues will be
issued by local governments by the end of September.
“We expect to see continued fiscal policy support into 2020,” said ADB
senior economist Jian Zhuang.
The government will increase the use of local government special bonds to
push up infrastructure investment, predicted ADB economists, who also warned
that containing debt would become more challenging over time given that local
governments have high spending needs but a weak revenue base.
The bank has also revised up its inflation predictions to 2.6 percent from
1.9 percent for 2019 — largely due to heavy increases in pork prices as the
country battles the African swine fever outbreak that has seen more than a
million pigs culled.
Merchandise export growth plummeted from 12.0 percent in the first half of
2018 to a bare 0.4 percent this year, said the ADB.
Exports to the US have fallen nearly 10 percent, amid a bruising trade war
that has seen tariffs slapped on billions of dollars in two-way trade.
Earlier this month, China’s central bank slashed reserve requirement
ratios for banks — freeing up about $126 billion to boost lending to mostly
small and medium enterprises.
But central bank governor Yi Gang said Tuesday that there was no pressing
need for big policy easing steps or to further cut the amount of cash lenders
must keep in reserve to release more money into the stuttering economy.
BSS/AFP/HR/1130