While the Chinese government has indicated a greater tolerance for a slower growth, economists expect Beijing to turn on the stimulus taps to prop up the economy following a sharp deceleration in activity growth in August.
“I think the data was sufficiently weak to lead to significant steps. When? Such responses tend to be quite fast in Beijing. I would expect to see steps, or announcements of them, in the coming weeks,” Louis Kuijs, chief China economist at RBS told CNBC.
Kuijs expects the government to boost infrastructure investment, relax property market policies and take more monetary easing steps. “If downward pressures on growth persist in the coming months, we would expect a shift to a bolder approach, with more general and higher profile measures, including possibly a general cut in reserve requirement rates or lending interest rates,” he said.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.