“It’s very clear that China’s economy is on a very soft footing at this moment and in the meantime, we do see there are a lot of bearish sentiments towards China’s economic outlook, as well as the financial market outlook,” said Hao Zhou, senior emerging market economist for Asia at Commerzbank, before the release of China’s GDP data. His third-quarter GDP growth forecast for China was 6.6 percent.
For its second quarter, China announced earlier this year that it had posted GDP growth of 6.7 percent from a year ago, slightly lower than 6.8 percent in the first quarter of 2018 as Beijing cracked down on risky credit amid the escalating trade tensions.
Indeed, financial deleveraging has slowed this year versus the last two years, Zhou told CNBC’s “The Rundown.”
However, the People’s Bank of China has already cut banks’ reserve requirements four times this year. Those moves have been described as an attempt to prop up liquidity and growth amid the trade dispute with Washington.
China has sought to implement relatively tight monetary policy to force financial deleveraging and cut debt. However, easier monetary conditions — achieved through means like cutting banks’ reserve requirements — are seen as a tool to support growth.
China’s official growth target this year is around 6.5 percent. And the country is still on track to meet its target: China’s economy grew 6.7 percent year-over-year in the first nine months of 2018, according to official statistics.
Beijing, Zhou predicted, will keep growth stable, but there will be some “struggling” in the process.
— Reuters contributed to this report.