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Macro Comment China

Macro Comment China — Trade war starting to bite

Economic growth is slowing amid the trade war with the US, and a round of government stimulus early this year had limited effect. We expect that growth will decelerate owing to the continued trade turmoil and because additional stimulus will likely be of measured magnitude only.

Bjarke Roed-Frederiksen, Senior Economist | bjro03@handelsbanken.dk

Macro Comment China — China unleashes the currency weapon

China's authorities allowed its currency to depreciate and noted that the weakening was related to the trade war with the US. With the USD/CNY having breached the 7.0 threshold, we now expect the CNY to weaken further as the trade war persists.

Bjarke Roed-Frederiksen, Senior Economist | bjro03@handelsbanken.dk

Macro Comment China — Flare-up of trade war clouds the outlook for the CNY

The escalation in trade tensions have weakened the CNY recently. We have revised our near-term forecasts accordingly, but baring a fully fledged trade war, we still expect the CNY to remain stable and thus see a slightly stronger CNY versus the USD ahead.

Bjarke Roed-Frederiksen, Senior Economist | bjro03@handelsbanken.dk

Macro Comment China — China lowers growth target and eases fiscal policy

By lowering the growth target and at the same time announcing growth stimulus, the authorities clearly acknowledge the current weak stance of the economy. Renewed focus on fiscal instead of monetary policy easing bodes well for the fight against excessive credit.

Bjarke Roed-Frederiksen, Senior Economist | bjro03@handelsbanken.dk

Macro Comment China — Currency stability entering trade talks

China seems ready to promise some sort of currency stability as part of a broader trade agreement with the US. This supports our long-held view that China will continue to keep its currency generally stable in effective terms.

Bjarke Roed-Frederiksen, Senior Economist | bjro03@handelsbanken.dk

Macro Comment China — Temporary stabilisation from stimuli

Growth is slowing and more headwinds lie ahead. Further stimulus measures will most likely be implemented, but the room for policy easing is more limited than earlier. We expect stimuli to stabilise growth temporarily later this year, but see growth slowing again into next year.

Bjarke Roed-Frederiksen, Senior Economist | bjro03@handelsbanken.dk