major short and long term lending rates in July. Major investment banks and research firms forecast the Chinese yuan would weaken further next year, in anticipation of President-elect Donald Trump following through with his tariff threats. Expect China to use central government balance sheet to support demand: Strategistwatch now VIDEO03:11 Expect China to use central government balance sheet to support domestic demand Despite a flurry of stimulus measures since late September, latest economic data out of China showed the country is still contending with entrenched deflation, amid tepid consumer demand and a protracted property market slump. The Fed’s easing cycle going forward will create “some room for the PBOC to follow up,” Yan Wang, chief emerging markets and China strategist at Alpine Macro told CNBC’s “Street Signs Asia” on Thursday, while stressing that fiscal easing will play a more critical role in driving the Chinese economy next year. In a note to CNBC on Friday, Wang said he believed the PBOC should continue cutting rates to alleviate the yuan’s deflationary pressure against other currencies. “Meanwhile, the Chinese government possesses greater fiscal flexibility and is likely to rely more on fiscal measures to stimulate growth,” he added. — CNBC’s Dylan Butts contributed to this report.