While the policy easing since late last year has helped moderate the slowdown, the impact has been small, according to a report by Louis Kuijs, chief Asia economist at Oxford Economics in Hong Kong.

With the domestic economy slowing, conflict with the US and weak global trade momentum, “more policy easing is needed to convincingly stabilise economic growth,” he said.

China’s fiscal stimulus package including about two trillion yuan (US$279 billion) of tax cuts has had less of a multiplier effect on lifting growth at home and abroad, compared with previous easing which was mainly focused on infrastructure and housing spending, the report said.

Demand for credit has stayed weak as the economy slows and the trade war escalates, but policymakers have remained reluctant to boost credit growth in a major way.

China’s economic growth softened to 6.2% in the second quarter, the lowest pace in almost three decades and close to the lower bound of the government’s full-year target of between 6% and 6.5%.

Earliest indicators compiled by Bloomberg showed the economy is slowing further in August.

“We still expect growth to stabilise, but later than envisaged before and at a lower rate,” Kuijs said. “The key downside risk to this forecast is policymakers not stepping up the policy easing sufficiently.”