The outlook on Chinese growth still looks fragile – UOB

Economist Ho Woei Chen at UOB Group evaluated the recent PMI releases in China and the outlook on the economic activity.

“China’s official PMIs for October showed further signs of weakness in both the manufacturing and non-manufacturing sectors. The US and China still face significant challenges in addressing bilateral trade concerns but there are enough positive developments to point to the likely success of a “Phase 1” trade deal. The cancellation of the 16-17 November APEC summit may lead to some delays but the interim agreement is expected to be signed before 15 December when the US is scheduled to implement new additional tariffs of 15% on approximately US$160 of Chinese goods. The cancellation of these new additional tariffs will help to further de-escalate the trade tensions. Looking ahead, China’s manufacturing outlook is dependent on the sustainability of the US-China trade truce and prospect of an eventual trade agreement. As there remains significant uncertainties, China’s growth outlook may stay weak into 2020 should existing tariffs stay in force. China’s economy expanded by 6.2% y/y in the first three quarters of 2019. For now, we maintain our growth forecast for China to expand 6.1% in 2019 (4Q19f: 6.0%) and 5.9% in 2020”.