Morgan Stanley economist Robin Xing said on Wednesday China will have a bigger room for countercyclical adjustments to stabilize the economy as there have been more favorable factors at home and abroad.
From the global perspective, central banks have started to take a more dovish monetary stance, in particular, the U.S. Federal Reserve turning more prudent and patient about interest rate hikes, which gives more leeway for policies of the emerging markets including China, Xing said at a press briefing.
The external circumstance for China's foreign trade is expected to improve, and the Chinese yuan has appreciated against a basket of currencies, he said, predicting the yuan will continue the strong trend in 2019 and 2020.
Domestically, inflation remained tame, which means ample room for monetary measures, Xing said.
The consumer price index rose 1.7 percent year on year in January, while the producer price index edged up 0.1 percent, according to the National Bureau of Statistics.
The favorable conditions allow Chinese policymakers to step up pro-growth efforts to fend off short-term economic volatility, with measures including further tax breaks and stronger financial support for the real economy, Xing said.
Thanks to an easier financing environment, China's infrastructure investment growth will likely stabilize in March and April, and medium- to long-term bank loans to private enterprises may recover in the second to third quarters, Xing said.
With all of the measures in place, China's GDP growth will hopefully bottom out after Q2, Xing said.
While optimistic about the short-term performance of the economy, Xing also remained confident about the sustainability backed by steady structural reforms and wider opening-up.
In the long run, China's supply-side structural reform will boost the total factor productivity, which is likely to return to the robust growth seen before the global financial crisis a decade ago, Xing said.