Market Segment
December 7, 2019
CRU: China in 2020--Government Spending to Play Larger Role
Written by Jumana Saleheen
By CRU Chief Economist Jumana Saleheen, from CRU’s Global Steel Trade Service
This piece sets out insights gained from a visit to CRUs Beijing office. The trade war has been an unexpected headwind to China’s economy and there is a real concern about the risks of a sharper than desirable growth slowdown. In response the government is expected to announce further stimulus (which is already built into our forecasts) to ensure nothing less than only a gradual slowdown in GDP growth. But we now expect much of that stimulus (around four-fifths) to come in the form of central and local government spending rather than tax cuts. This is net positive news for commodities demand. Monetary policy will also play a greater role next year, as headline inflation rates ease.
