Activity growth continued to slow in November. Industrial production (+5.4% y/y from +5.9% in October) and retail sales (+8.1% y/y from +8.6%) growth moderated. The only good news was a continued recovery of investment (+5.9% y/y in Jan-Nov) which suggests that previous supportive measures have begun to have an impact. Currently, China is having its Central Economic Work Conference. We expect policymakers to come out with new measures to stabilize the domestic economy. Fiscal policy will likely be the main tool, with supportive measures for households (tax cuts and deductions) in order to boost private consumption, and a rise in infrastructure spending to reinforce investment. Meanwhile, the accommodative monetary policy stance should be maintained – with specific measures to support fragile agents (e.g. SMEs). Yet we do not expect a cut in the key policy rate as long as trade tensions do no escalate. Economic growth is forecast to slow to +6.3% in 2019 from +6.6% in 2018.
