China's stimulus-boosted private sector is on track to lead the economy to a "self-sustained recovery" that could see growth hit 6.6 percent this year, according to HSBC.
And while that would only match last year's GDP result — the worst performance for the world's second-largest economy in 28 years — it is well above current consensus of about 6.2 percent for 2019.
Pessimism has engulfed the outlook for China's economy this year following 2018's performance as waning growth and the still-unresolved trade war with the United States cast long shadows.
The Chinese government last month set its GDP growth target for this year at between 6.0 percent to 6.5 percent, below last year's of about 6.5 percent. China is set to announce first quarter economic growth on April 17.
Alarmed by sliding economic indicators, the Chinese government in 2018 introduced measures, such as encouraging banks to increase lending, to bolster growth — moving away from a policy that had been aimed at reining in debt.
That looser stance is accelerating this year, with Premier Li Keqiang announcing fresh stimulus measures last month, including cuts in taxes and fees worth 2 trillion yuan ($297.73 billion).
HSBC said in a report Monday that recent economic data, including stronger manufacturing activity, show that "growth has bottomed and will gradually pick up in the coming quarters as the stimulus measures filter through."
'This time is very different'
The British bank said that it sees GDP growth hitting 6.7 percent by the fourth quarter, which it predicted will push the figure for the full year to 6.6 percent.
"The shape of the stimulus package this time is very different from earlier rounds," Hong Kong-based HSBC economists Qu Hongbin and Julia Wang said in the report. "We believe that it will not only work, but will also trigger a self-sustained recovery in the coming quarters."
They said previous packages were focused on infrastructure spending but the latest tax and fee cut announced by Li — which they described as the biggest in a decade — is centered on corporate tax cuts for the crucial non-state sector.
Non-state companies make up more than 80 percent of employment in urban areas and over 70 percent of GDP, they said.
"So rising private investment could benefit over 80 percent of urban consumers, boosting final demand for products and services," Qu and Wang said. "This would lead to a self-sustained growth recovery, in our view."
The concerns of private companies about their worsening conditions last year drew the attention of Chinese President Xi Jinping, who assured them that authorities stood ready to help.
Economists elsewhere are also noting signs that China's economy is stabilizing. Citi, in a report Monday, said it sees "upside risks" to its current 6.2 percent growth forecast for this year.