Disclosures&Disclaimer:ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.www.research.hsbc.comPlayinterviewwithQuHongbinBy:QuHongbin,JuliaWang,JingyangChen,ErinXinandTonyZhouEconomicsChinaJune2019TradeWarAwinningstrategyforChinaRetaliationaside,steppingupstimulustoreflatedomesticdemandholdsthekeytomitigatingtheimpactoftariffsAcceleratingstructuralreformstocreatealevelplayingfieldwouldrevitalisetheprivatesectorChinashouldfurtheropenupitseconomyinordertoclimbthetechnologyladder1Economics●ChinaJune2019AwinningstrategywiththreearrowsPotentialimpactoftradewaronChina’sheadlineGDPChinashouldspeedupstructuralreformstoboosteconomicgrowth...ReflatingdomesticdemandSource:HSBCestimatesCouldtranslateintoa0.3-0.5pptlossinheadlineGDPgrowthinthenext12monthsChinashouldtargetmorestimulativemonetaryandfiscalpolicies:MonetarypoliciesFiscalpoliciesRecentincreaseoftarifffrom10%to25%onUSD200bnofChineseproductsIftheUSslapsa25%tariffontherestofChina'sUSD300bnexportstotheUSGeneralRRRcutThroughhouseholdregistration,urbanmigrantsareabletofreeupfundsforconsumptionCompetitiveneutralitylevelstheplayingfieldbetweenSOEsandtheprivatesectorIntellectualpropertyrightsprotectionsupportsinnovation-ledgrowthDiversifyChina’straderelations-EMAsiawillbeakeybeneficiaryDeepenrelationswithmoredevelopedmarketsoutsidetheUSImprovebusinessenvironmentandattracthighqualityforeign-directinvestmentTargetedRRRcutTargetedMid-termLendingFacilityValue-addedtaxcutCorporateincometaxcutBoostinginfrastructureinvestment...toopenupanddeepentradeandinvestmentrelationswithothereconomiesCouldtranslateintoa1.1-1.2pptlossinheadlineGDPgrowthinthenext12monthsEconomics●ChinaJune20192AlleyeswillbeontheG20meetinginOsaka,Japanon28-29JunetoseewhetherChinaandtheUScanreachsomeformofagreementontrade,oratleastagreetokeeptalking.Wehopethisreporthasalongershelflife.Itassessesthepotentialnear-andmedium-termimpactonChina’seconomyunderdifferenttariffscenariosandwh...
