Today China’s National People’s Congress reduced its economic growth target to 6.00-6.50%, announced a policy of “easing for stability” and initiated meaningful tax cuts. Policy remains focused on fiscal stimulus over credit expansion. However, we anticipate the central bank will cut benchmark interest rates by 1.5% by the end of 2019. Despite weak domestic growth, GDP will stabilize increasing demand for Chinese assets. The yuan’s bullish run will slow, as markets reduce emphasis on trade tensions and increase focus on the falling current account balance
By Peter Rosenstreich
