The government of China has signaled that further incentive measures are planned as disappointing economic data suggests that the current fragmented approach is not working.
The economic situation in the country is shrinking, downward pressure is on the rise, and the government has to take timely steps to counter this, according to a statement from the Politburo meeting with President Xi Jinping.
"Accepting slower growth has long been a challenge for Beijing, but now the pace of slowdown is definitely beyond the comfort zone," said Katrina El, an Moody's Analytics economist at Sydney. "In recent years, the balancing act has affected the risks in the financial system against the pressure to stabilize economic growth, and it seems that the latter is once again a priority."
Production growth slowed down to the lowest level for more than two years, and while economists saw further tax cuts, few of them predicted greater incentives for the moment.
What follows from now on?
The United States is preparing to declare import tariffs for residual Chinese imports if the talks between Trump and Xi do not go smoothly. The meeting will be held on 30 November and will be combined with the G20. Additional tariffs will prove to be a very serious test for Chinese manufacturers, prompting them to look for new partners in the face of Europe and the Asian countries.
Chief Executive Officer of JPMorgan Chase & Co. Jamie Dimon said the escalation of US-China trade tensions is increasingly beginning to resemble a trade war, not just a "shoot-out."
Source: Bloomberg Finance L.P.
Charts: Used with permission of Bloomberg Finance L.P
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