Caspian Energy Journal Caspian European Club
Tuesday, 15 January 2019 15:00

China signals more stimulus as economic slowdown deepens

China signals more stimulus as economic slowdown deepens

China on Tuesday signaled more stimulus measures in the near term as a tariff war with the United States took a heavy toll on its trade sector and raised the risk of a sharper economic slowdown, Caspian Energy News ( reports with reference to Reuters.

The world’s second-largest economy will aim to achieve “a good start” in the first quarter, the National Development and Reform Commission (NDRC) said in a statement, indicating the government is ready to counter rising pressure on growth.

Surprising contractions in China’s December trade and factory activity have stirred speculation over whether Beijing needs to switch to more forceful stimulus measures, though most analysts believe the government will avoid doing so due to worries it could heighten debt risks and weaken the yuan.

 “Further economic stimulus measures will be needed. The authorities seem to be taking their time to deliver this, perhaps chastened by the overkill of their stimulus in the financial crisis,” ING economists said in a note to client.

Some analysts believe China could deliver 2 trillion yuan ($296.21 billion) worth of cuts in taxes and fees, and allow local governments to issue another 2 trillion yuan in special bonds largely used to fund key projects. Most, however, expect the fresh stimulus will take months to start feeding into the economy.

China’s growth slowed in 2018 as a years-long campaign to reduce a mountain of debt and a crackdown on riskier lending practices hurt domestic demand. As the trade war with the United States escalated last year and hit exports, global financial markets went into a tailspin on worries about a sharper China slowdown though many analysts believe an economic hard-landing is unlikely.

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Person in charge of the newsline: Olga Nagiyeva 

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