China - Getting the stimulus dosage right

Standard Chartered Bank maintains its 2019 growth forecast of 6.4 percent for China, above market consensus. The Chinese economy faces downward pressure from sluggish credit growth, a possible property market correction, and trade frictions with the United States.

We estimate that full implementation of announced US tariffs (25 percent additional tariffs on $250 billion worth of Chinese products) - which we think is still likely despite the recently agreed tariff truce - would lower GDP growth by 0.6 percentage point.

Yet the Chinese government remains committed to its goal of doubling 2010 GDP by 2020, and may set a growth target of 6.0-6.5 percent for 2019. In fact, policy support has been introduced to contain the downturn, and we believe the government can meet the target.