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China: What to expect from the upcoming Central Economic Work Conference? - ING

Iris Pang, economist at ING, suggests that Chinese government has to focus on defusing  trade tension with the US and expects that the government will need to put out a pro-growth plan as well as open up more markets for foreign investments during the Central Economic Work Conference which should be held in December.

Key Quotes

“We expect the following outcomes from the Central Economic Work Conference:

  • Consolidation of Xi's thoughts, key to how the market works with the government.
  • An emphasis on high-quality growth,  promoting advanced technology. We expect only low profile pronouncements on technology so to avoid triggering any re-escalation of China-US tensions.
  • A further opening up of markets to foreign access: measures could include reducing tariff rates on more goods and easing market access for foreigners.
  • A proactive monetary policy that can support economic growth.
  • A sizeable fiscal stimulus - we expect CNY 4 trillion per year in 2019 and 2020. The amount is comparable in size to 2009 -2011. GDP has increased 2.3x between 2009 and 2018. 
  • Consolidate pro-growth measures for rural regions, so boosting domestic demand.
  • Limiting risks in the asset market.
  • An absence of further tightening policies in the housing market. This will allow some local governments to relax housing tightening measures and lowering mortgage interest rates.
  • A softer tone on pollution prevention so that coal plants can keep running to support economic growth.”

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