A man carrying a kite in the shape of the Chinese national flag walks along the Bund in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)

Economists See China Growth Holding Up in Face of Trump Standoff

(Bloomberg) -- China’s economic expansion will maintain its expected course this year, even in the face of an escalating trade war with the U.S., according to economists surveyed by Bloomberg.

The world’s second-largest economy will grow by 6.6 percent this year, according to the median of 62 estimates in a poll conducted July 16-24. That’s even a slight improvement from the outlook the previous month, which saw 6.5 percent growth. That level is also the government’s official target.

As the U.S. and China have now begun imposing tariffs on some of each other’s goods, officials in Beijing have taken action to defend the expansion, from a softening of monetary policy to a package of fiscal policies announced on July 23. Those measures range from tax breaks to special bonds for infrastructure investment.

The ratio of deposits that banks are required to lock away at the People’s Bank of China will be reduced to 15 percent by the end of this quarter, 14.5 percent by the end of 2018 and head lower through 2020, according to the survey. The ratio currently stands at 15.5 percent for major banks, after three cuts so far this year.

Growth is still seen as coming in slower than in 2017, when the economy posted a 6.9 percent expansion. After a robust start to this year, that means a moderation in pace to 6.5 percent in both the third and fourth quarters, according to the survey.

The measures announced this week may help to stabilize growth in fixed-asset investment, which registered the slowest pace on record in the first half. That pace will stand at 6.5 percent in the third quarter and 6.8 percent in the fourth, according to the survey.

©2018 Bloomberg L.P.