The Chinese economy grew 6.0 percent YoY in 3Q19, representing the slowest growth in almost 30 years and declining from the 6.2 percent pace recorded during 2Q19. The disappointing economic performance, which stands at the lower end of China's growth target, will likely force the government to introduce new economic stimuli in order to ensure that its 2019 economic growth remains within the set target band of 6.0-6.5 percent YoY. Meanwhile, weak internal and external demand has steadily inhibited the Chinese economic growth while a series of economic stimuli implemented by the government may not be sufficient to shore up the economy. In addition, risk in the financial sector as a result of lofty debt has forced Beijing to be cautious over its economic stimuli, in particular monetary policy.
We at KResearch expect that the Chinese government will likely introduce new stimulus measures, in particular fiscal policy, during 4Q19. As a result, its GDP may grow 6.0 percent YoY in 4Q19, which would be at the same par as that reported for 3Q19, bringing the full-year growth to 6.2 percent YoY. Looking ahead, it is expected that the Chinese economy will experience more downside risks amid the anemic global economy and protracted trade war. Given this, we project that the Chinese economy may grow at less than 6 percent in 2020. Meanwhile, the IMF has revised downward its 2020 growth forecast for the Chinese economy to 5.8 percent. Close attention must be paid to risks stemming from the prolonged US-China trade war and the effectiveness of China's accommodative policies.