Data from China's Bureau of Statistics show on Monday that China's economic output cooled in the fourth quarter of 2018 to 6.4 percent, down 0.1 percentage point from the previous quarter.

That dragged the full-year GDP growth to 6.6 percent, the slowest pace since 1990. Robin Xing, Morgan Stanley's chief China economist, said that external factors are to blame for the slowdown. He also pointed out that these figures, though undershooting the targets, still remain manageable.

“China's economy slowed due to the extremely difficult external environment. But looking at the numbers, it is still within the government target, because policymakers adjusted the standard and intensity in the middle of the year accordingly,” Xing said.

Trade frictions with the U.S. not only overshadow growth prospects of the Chinese economy, but are also causing concerns for American investors.

“It will remain an uncertainty for China's economy. It could drag down growth by 0.2 to 0.3 percentage point. But compared with six or seven months ago, the trade tensions are also affecting U.S. firms' profitability. We estimate, if further escalations occur, more tariffs on Chinese goods, it could affect S&P 500 profitability by as much as 1.5 percent of net income,” Xing explained.

With the trade tensions simmering on and a range of geopolitical risks on the horizon, Xing said that further policy-easing and more stimulus measures are expected in the coming quarters.

“In the near term, it is about boosting demand, using the three arrows, tax cuts, infrastructure, easing financial conditions for corporations. Over the medium to long run, we think China is shifting to supply-side reform 2.0, with greater tax cuts and further opening up of the economy,” Xing said.

Xing also warned that the GDP growth would slow before it stabilizes this year.  Slackening global demand and weak consumer confidence at home are two of major hurdles the policymakers have to tackle. Xing expected China's GDP growth rate to fall to 6.1 percent to 6.2 percent early this year. However, from the second quarter on, after the effect of the stimulus packages kicks in, the overall GDP growth could climb to 6.3 percent in 2019.

(CGTN's Du Zhongyan also contributed to the story.)