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China must give consumers confidence to spend as trade war rages

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China’s slowdown is not looking good. The trade war with America is dragging on exports, new investment intentions remain sluggish and consumer demand is looking more lacklustre. Beijing has its work cut out breathing new life back into the flagging economy. Unless there is a breakthrough in the trade dispute pretty soon, Beijing will have to stump up much more monetary and fiscal stimulus to speed things along. With the global picture looking shakier, China must stay focused on domestic reflation to prevent a deeper slowdown next year.

China’s economy is definitely losing momentum. Gross domestic product growth should hit Beijing’s target of around 6.5 per cent for this year, but what happens next is critical given the growing global gloom. Consensus forecasts show economists looking for a further mild deceleration, to 6.3 per cent expansion next year, well down on what China has been used to in the past, but with rising risks the outcome could be much worse. The trade dispute with the United States is taking its toll and Beijing needs some answers pretty quick.

Pessimists say growth could even be closer to 5 per cent next year if the government is not careful. The solutions are clear. Either Beijing buries the hatchet........

© South China Morning Post