Assessing the Latest Developments in the Chinese Economy

Authors

In the aftermath of the scrapping of the dynamic Zero-COVID policy in late 2022, it was expected that the Chinese economy would rebound and witness rapid growth on account of pent-up consumer demand, increased fiscal spending, and policy predictability vis-a-vis efforts to boost market confidence and signal openness.

However, despite a relatively positive Q1 performance in 2023, China’s economic data for H1 indicates systemic weaknesses.

There are persistent challenges with stimulating domestic demand, in addition to local government debt, property sector fragility, and declining foreign trade and investment.

This document compares data on the Chinese economy, and assesses projections surrounding the rebounding of the economy in the aftermath of the scrapping of the Zero-COVID policy. It further highlights the headwinds facing the economy in key areas such as domestic consumption, real estate, net exports, local government debt, and Foreign Direct Investment.

Some of the key judgements we draw are as follows: