China economy to get more stimulus to fight trade war tariffs? Official drops hint help may come

Disappointing April economic data and the expected impact of new US trade tariffs have convinced some that more stimulus is on the way

Central planner spokesperson cites ‘six key aspects’ of economic stabilisation for the first time since government dropped it from their statements in April

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Chinese President Xi Jinping waves to reporters from the podium with members of his leadership team including Premier Li Keqiang, Li Zhanshu, and Wang Huning at the Great Hall of the People in Beijing. Photo: Kyodo

Frank Tangin BeijingandAmanda Leein Hong Kong

Published: 7:00pm, 17 May 2019Updated: 7:00pm, 17 May 2019

The debate over whether China needs a new round of stimulus to offset weakening economic growth has returned, following disappointing April economic data and the threat by the United States to expand tariffs to cover all Chinese imports.

That debate will intensify with the news that Wang Yang, a member of the ruling Communist Party’s policymaking Politburo Standing Committee, told Taiwanese businessmen at a meeting in Beijing on Thursday that the trade war, in the worst case scenario, could cut Chinese growth by a full percentage point this year.

This would push the growth rate below the government’s target rate of between 6.0 per cent and 6.5 per cent rate for this year without additional stimulus help. The economy grew by 6.4 per cent in the first quarter of 2019, the same rate as in the previous quarter.

Some analysts expect the government to be forced to expand fiscal and monetary stimulus to maintain employment levels, its top policy priority. Others argue that while the government may “fine-tune” existing stimulus measures, no major new stimulus should be expected.

Members of the Communist Party of China's new Politburo Standing Committee Han Zheng, from left, Wang Huning, Li Zhanshu, Xi Jinping, Li Keqiang, Wang Yang and Zhao Leji stand on stage in the East Hall of the Great Hall of the People in Beijing, China. Photo: Bloomberg

The government has been mostly tight-lipped about its policy plans. However, on Friday, Meng Wei, spokesperson for the National Development and Reform Commission (NDRC), China’s central planning agency, seemed to suggest that further stimulus was possible if economic conditions warranted.