While there are questions over exactly how aggressively the Federal Reserve (Fed) will act to support the US economy, Beijing’s commitment to keep the show on the road is in no doubt. If China cannot “win” the trade war, it will ensure its economic ambitions remain on track. Early reticence to open the monetary and fiscal spigots is fading. Local government bonds are being issued to fund infrastructure projects, and taxes are being cut to boost consumer spending (see below). We do not doubt the intention of policymakers to keep growth in the region of 6%. The only question is how quickly and powerfully the authorities’ efforts bear fruit, and whether that stimulus eventually serves to support growth in China-dependent countries.
% of GDP