More fiscal support as expected but no massive stimulus for China

The Chinese government set new economic targets and policy announcements for 2019, broadly in line with what we had been expecting.


The new economic targets for 2019 and policy announcements are broadly in line with our expectations. They generally reflect Chinese policymakers’ intention to support growth in the face of economic headwinds but to avoid massive stimulus.

The target for real GDP growth for 2019 was lowered to a range of between 6.0% and 6.5%, from “around 6.5%” in 2018 and 2017, suggesting Beijing is fully aware of the headwinds the economy is facing in the near term.

M2 and total social financing (TSF) are expected to grow in line with nominal GDP growth, while monetary policy should remain prudent.

Additional tax cuts were announced, as expected. The total reduction in taxes and fees is expected to reach Rmb2trn in 2019, compared with Rmb1.3trn already achieved in 2018. However, the fiscal deficit target for 2019 is only moderately higher than last year, indicating overall fiscal stimulus may not be as large as many have expected.

In the absence of any major surprises, our near-term economic outlook for China is unchanged.

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