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China Growth Likely to Slip Below 6% by ’21, ANZ’s Yetsenga Says

China Growth Likely to Slip Below 6% by ’21, ANZ’s Yetsenga Says

(Bloomberg) -- China’s economic growth will likely decelerate to below 6% in 2021 as part of an “inexorable structural slowdown” that’s being hastened by a sluggish global economy, Australia & New Zealand Banking Group Ltd. says

ANZ Chief Economist Richard Yetsenga pointed to the International Monetary Fund’s downgrade of the world economy’s outlook to buttress his argument. He noted in an interview with Bloomberg Television in Sydney Wednesday that the fund shaved 0.1 percentage point from its China forecast in 2019 to 6.2%, the weakest expansion since the series began, and to 6% in 2020.

“The structural headwinds for China are pretty binding,” Yetsenga said, adding that the slowing of the largest economy after the U.S. is going to have wider implications for the international picture. “China’s a third of global GDP growth. The world’s got a maths problem and there’s no other economy that’s of meaningful scale that can fill that gap.”

Policy measures out of Beijing, including fiscal spending, fewer constraints on local government, a loosening of housing policy and more liquidity in the interbank market haven’t been sufficient to revitalize short-term growth, he said. He suggested the People’s Bank of China could cut interest rates if the Federal Reserve follows through on its widely expected easing.

“You would think if the Fed goes, the PBOC will at some stage also sneak a little rate cut in because they can from a currency perspective,” he said.

PBOC chief Yi Gang said in an interview published Tuesday that the bank’s current rate level was appropriate and it would make any decisions based on domestic considerations.

To contact the reporter on this story: Sybilla Gross in Sydney at sgross61@bloomberg.net

To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Michael Heath

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