China | Growth slowdown confirmed in August

Summary

A batch of August indicators announced today pointed to a significant slowdown in economic activities this summer. Together with the previously released trade and credit data, it suggests that the escalating uncertainties from the US-China trade war dampened people’s confidence and hamper economic expansion.

Key points

• Key points:
• The growth outlook in the rest 2019 depends on the evolution of the persistent US-China trade war as well as the authorities’ policy responses to the current growth deceleration.
• We therefore anticipate more monetary and fiscal easing measures to be deployed to sustain growth momentum.
• Altogether, we maintain our 2019 GDP forecasting at 6% (the authorities’ target: 6-6.5%). The risk of growth deceleration in 2H 2019 remains high.
• The growth slowdown in August is broad-based as all indicators are below the previous readings and the market consensus.
• August credit data accelerated from the previous month readings as the PBoC beefed up their efforts to stimulate the economy after setting a new policy interest rate (LPR) and allowing more depreciation of the RMB.

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