Goldman Sachs warns that China will struggle to stimulate its slowing economy
- It will be tricky for Beijing to calibrate the right dosage of stimulus to prevent a sharp economic slowdown, says economist Andrew Tilton
- There is a danger that Chinese policymakers could underestimate the size of the risk and not offer enough stimulus
Global growth concerns are complicating Chinese policymakers’ efforts to stabilise its economy, said Andrew Tilton, chief Asia-Pacific economist at Goldman Sachs, as Beijing embarked on a new round of stimulus.
It will be increasingly tricky for Beijing to calibrate the right dosage of stimulus to prevent a sharp economic slowdown this year, Tilton told an event in Hong Kong this week.
Tilton said there is a danger that Chinese policymakers could underestimate the size of the risk and not offer enough stimulus, particularly as it looks to deal with sluggish demand in key export markets.
“If growth is slowing globally, China is facing a less friendly external environment in terms of being able to export a lot. And if growth is slowing domestically as well, then you may need to do more to stabilise growth than what has been done so far,” Tilton said. “The risk is you are doing too little,” he said.
On the same day, the People’s Bank of China (PBOC), China’s central bank, injected 257.5 billion yuan (US$37.9 billion) into the banking system for the first time using its targeted medium-term lending facility to increase loans to struggling firms.
