ING state that "even with fiscal stimulus.....>

CHINA: ING state that "even with fiscal stimulus supporting infrastructure

investment and monetary easing at the same time, we worry about the outlook for

the Chinese economy in light of the trade war. We are lowering our GDP growth

rate in 2018 from 6.7% to 6.6% and from 6.5% to 6.3% in 2019. More stimulus

would support the 2019 growth rate, but there is still a limit to what the

government can do. Once again, infrastructure projects will be at the heart of

fiscal stimulus. This will come from credit expansion because some of the fiscal

stimulus comes from SOEs or local government financial vehicles. This also means

that we will see overcapacity both this year and next. The side-effect of

over-leveraged corporates or local government would probably be seen only after

a couple of years when interest costs rise after the effects of the trade war

fade. By that time, we may need to analyse overcapacity and financial

deleveraging for a second time."