China's economy is facing difficult challenges. Since 2018 there have been increasing signs of slowing growth momentum, mostly tied to the lagged effect of previous deleveraging efforts in 2016-17, but exacerbated by the trade war with the US. To mitigate these risks, China's policymakers will continue to implement fiscal and monetary stimulus in the coming year. This will support the world's second largest economy in the short term, but in the process will add to China's debt overhang built up over the past decade. Over the medium term, we expect China's real GDP growth to fall below 5% by the mid-2020s as badly-needed structural reforms constrain economic activity.
As China slows, the baton of growth will pass to South and South-east Asia. This process is also being accelerated as a result of the US-China trade war, which shows no signs of resolution. Regardless of developments tied to merchandise trade flows, we expect the dispute to worsen in non-tariff areas, from technology and finance to investment and security. Although a mass corporate exodus from China is unlikely, multinationals will continue to diversify their operations into South-east Asia to mitigate the impact of the dispute. This may provide an investment boon to the region in the 2020‑24 period, but the benefits will be felt unevenly across these markets.
South-east Asia will also continue to benefit from investment under the Belt and Road Initiative (BRI), which has strategic significance as a vehicle for Chinese-led integration and development, and which we expect to remain a priority even as China's domestic economy slows. So far more than 60% of Chinese overseas direct investment to BRI countries has landed up in South-east Asia, with Singapore attracting by far the largest share, and investment is likely to remain selective.
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