LONDON: Investment bank JPMorgan lifted its forecasts for China’s economic growth on Monday following what it called a “surprisingly positive” deal with the United States to dial down the two countries’ trade war.
The U.S. will cut extra tariffs it imposed on Chinese imports in April to 30% from 145%, while Chinese duties on U.S. imports will fall to 10% from 125%. The new measures are effective for 90 days.
“The magnitude of the temporary tariff reduction is larger than expected,” analysts at the U.S. bank said in a note which singled out the replacement of the 34% “reciprocal” U.S. tariff on China with the 10% “universal” tariff that other countries also face as “surprisingly positive”.
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They estimated that as long as the new lower tariff rates are maintained for the rest of the year, China’s full-year GDP growth rate would hit 4.8% compared to the bank’s previous forecast of 4.1%.
“We no longer expect the (Chinese) government to introduce additional fiscal stimulus later this year,” they also added.
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