China's economy will not be hard landing, officials still have enough "bullets"

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      Bank of America Merrill Lynch, an investment bank, said in a report that although China's economic growth is expected to slow next year due to trade wars and other impacts, it does not believe there is a risk of a hard landing, nor is it pessimistic about China's macro outlook. The bank believes that China's top policymakers still have enough bullets for policy easing; with the Fourth Plenary Session of the Nineteenth Central Committee of the Communist Party of China and the "special session" to be held in November, there may be some positive catalysts in the short term.
Bank of America Merrill Lynch reported that market expectations for China's macroeconomic outlook have weakened in recent months after slowing domestic consumption and corporate performance reflected signs of a slump in investment. Although the negative impact of US tariff increases on Chinese imports has not yet begun, many people have taken this into account.
The report says it is undeniable that China's economic growth in the coming months is still likely to be headwind, and this slowdown is mainly due to the deleveraging measures taken by the Chinese government since September 2016, resulting in a slowdown in growth since March 2017. Together with potential external shocks from trade tariffs, this was reflected in the bank's earlier downward forecast of GDP growth to 6.1% in 2019.
If we look at the policy easing measures China has taken so far and the remaining available tools, we believe that even if the economic impact is likely to be greater next year, China's policy makers will also be able to stabilize economic growth. The possible easing measures are as follows:
1) fiscal infrastructure investment, such as launching more new infrastructure projects and speeding up the construction of existing projects.
2) Money - Credit liberalization, I believe there is still ample room for the Bank of China to further reduce the reserve requirement ratio (RRR) next year;
3) Finance - tax cuts stimulate investment, such as further lowering the value added tax and reducing the social insurance contribution rate;


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