China: Growth is now stabilising – Westpac

Elliot Clarke, analyst at Westpac, suggests that China’s Q4 GDP highlights how challenging 2019 was for the economy but growth is now stabilising, and opportunities await.

Key Quotes

“In the December quarter, annual growth again printed at 6.0%yr, leaving 2019 growth at 6.1%. That is near the bottom of authorities’ 6.0%–6.5% 2019 target range, but in line with our own expectation.”

“The past 12 months has been a particularly challenging period for China. This is not only because of tensions with the US, but also because of broad-based weakness in investment across the economy.”

“The latter is the result of government-led structural change, seen as necessary to improve the quality of the nation’s long-term investment as well as its financial stability.”

“In assessing the outlook, it is notable that the quarterly growth pace has, more or less, remained constant through the past year. The take-home here is that the primary loss of momentum was from 2018 into 2019. Since then, growth has been stabilising.”

“The deterioration we see ahead is only at the margin and restricted to the coming six months, resulting in year-average growth for 2020 overall of 5.8%.”

“We expect the above to be achieved in time, keeping GDP growth between 5.5–6.0% in coming years.”