Financial easing gaining traction in China: S&P

SINGAPORE - Financial conditions in China have eased again and, together with tax cuts, should partly help offset stiffening headwinds from trade, manufacturing, and real estate, says S&P Global Ratings. It says growth in China slowed in early 2019, based on limited data around the lunar New Year.

"PMI surveys dipped, new residential property starts tumbled in January-February to just 4.3% year-on-year, and car sales are still declining by almost 20% year-on-year.
 "Trade tensions may be taking a greater toll on activity, with exports declining in year-on-year terms and manufacturing investment growth starting the year very weak."
 In contrast, S&P says, financial conditions are easing, and this is apparent in falling real lending rates and a pick-up in credit with the three-month flow as a share of GDP rising to almost 8%.
 "Greater optimism is also apparent in an appreciating renminbi and an ongoing equity market rally. This should provide support to growth by the third quarter of the year."
 Shaun Roache, S&P Global Ratings' Asia-Pacific chief economist, says policy easing is steadily gaining traction, and this should put a soft floor under growth by mid-year.
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