Macro Forum: The Street View


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The Chinese economy ended 2019 on a relatively solid footing mostly benefiting from expectations of an early trade accord between China and the United States. This, coupled with Trump’s upcoming 2020 presidential campaign, raised skepticism about the sustainability of the current truce on trade. While the export market has been disrupted, direct US imports from China are down approximately 5% year-on-year in the 12 months through July 2019.

The outbreak of Coronavirus in Wuhan is expected to disrupt tertiary sector growth, as peoples mobility is restricted. As guidance, the SARS crisis in 2003 is estimated to have cut annual GDP growth by between 0.5% and 2.0%.

Monetary and fiscal policy remain coordinated at the start of the year. While direct stimulus has not yet been signalled, reductions in the Reserve Requirement Ratio and reform to the Loan Prime Rate are designed to help offset deleveraging efforts for private business. Lowered restrictions for local government bond issuance and VAT cuts aimed at unlocking further consumption growth are designed to help further, with national investment in infrastructure and heavy industry expected to return with more force to support employment in 2020.

Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
GDP* 6.2% 6% 6% -6.8%
Inflation* 2.7% 3% 4.5% 4.3%

* Year on Year



Real GDP Growth

Source: International Monetary Fund

China FX vs FV

Source: Bloomberg Spot Price and Actis methodology for Fundamental Value


Source: International Monetary Fund