China Direct

China's post-covid economy - China Leadership Monitor

China’s economy has emerged from “zero-Covid” without the inflation that occurred in some other major economies but with reduced consumption, minimal private investment growth, a weakened real estate sector, high youth unemployment, and constrained local government finances. Beijing is banking on a surge of new household spending and is planning only marginal new stimulus measures. Chinese leaders, however, are sending contradictory signals to entrepreneurs and foreign investors. China will almost certainly achieve its conservative growth target of 5 percent this year. But in the next few years, Beijing’s prioritization of national security over economic reforms will pose a risk to China’s economic trajectory.

To read the full article by Gerard DiPippo please click here.

Our thanks to Mr. DiPippo and the team at China Leadership Monitor for sharing this analysis.

Interpreting China's economy & recovery post-covid - CSIS

 

In this episode of Pekingology, Freeman Chair Jude Blanchette is joined by Carl Minzner – Senior Fellow for China Studies at the Council for Foreign Relations and a Professor of Law at Fordham Law School, Gerard Dipippo – Senior Fellow in the Economics Program at CSIS, and Andrew Polk – Co-founder of Trivium China and Senior associate with the Freeman Chair in China Studies at CSIS. Through the lens of China’s politburo and domestic leadership, they examine how China assesses its economy and recovery since the end of zero-COVID policies.

Our thanks to the team at CSIS for kindly sharing this podcast and insights.

Annual Economic Briefing - Singapore 13.04.23

The British Chamber, and our Title Event Partner Select Investors​, are delighted to re-introduce our flagship Annual Economic Briefing event, providing members with insights from senior economists at a national, regional and global perspective.

 

This year, we welcome Maybank Chief Economist, Chua Hak Bin, Oxford Economics' Senior Economist, Alex Holmes, OCBC Chief Economist, Selena Ling and Asia FX and Rates Strategist for BNP Paribas, Chidu Narayanan. The event will follow a format of presentations followed by a panel discussion moderated by Bloomberg's Senior Asia Economy Reporter, Michelle Jamrisko. The event will include opportunities for members to ask questions in the room or with sli.do.

 

Understanding the importance of providing our members with economic insights, the British Chamber is offering each member company a complimentary pass to this event, and we encourage each organisation to send an appropriate registered Chamber member to join the session. If the complimentary pass has been used for your company or additional members would like to attend, tickets can be purchased separately.

 

For more information and to register for this event please click here.

 

Our thanks to the British Chamber of Commerce in Singapore for kindly sharing this information.

 

1Q2023 China's Macro Outlook - MacroPolo

1Q2023 Key Takeaways:

• Contrary to some views, we believe the economic rebound will be most impressive in 1Q2023 and then peter out later this year. Put differently, we expect a “square root”-shaped growth (√) in 2023.
• Domestic and external constraints on the usual growth drivers—investment, exports, consumption, and stimulus—will likely generate stronger headwinds to growth than currently expected.
• In particular, the supposed “revenge spending” will likely have a modest impact on growth, as spending down excessive savings won’t have an outsized effect on boosting consumption.
• Fundamentally, Beijing appears unwilling to do much more beyond lifting Zero-Covid to buoy growth, so it is likely to set a more realistic growth target of ≤5% in March.

Please access the full report below:

Download 1Q2023 Macro Outlook

Our thanks to Houze Song and the team at MacroPolo and The Paulson Institute for kindly sharing this report.

World Bank - China Economic Update - Navigating Uncertainty

Kindly find the World Bank’s latest China Economic Update titled “Navigating Uncertainty ” released yesterday. In it The World Bank projects economic growth in China to slow to 2.7 percent in 2022 before recovering to 4.3 percent in 2023 amid a reopening of the economy. The growth outlook is subject to significant risks. The continued adaptation of China’s public health policies will be crucial to mitigate public health risks and also minimize further economic disruptions.

The report also includes a special feature on youth unemployment in China. 

Navigating Uncertainty - China's economy in 2023

China Economic Update Dec 2022

Our sincere thanks to China Chief Economist Ibrahim Chowdhury and his team for kindly sharing their report.

 

 

China's struggles to contain Omicron and stabilise the economy

China’s GDP growth rate has been falling since the first quarter of 2010. After more than 40 years of breathtaking growth, it is not surprising that China’s economy has lost some steam. Having fallen steadily from 10.6 per cent in 2010 to 6 per cent in 2019, it remains to be seen whether China’s growth will continue to decline and at what level it will stabilise.

China struggles to contain omicron and stabilise economy EAF

Our sincere thanks to the EAF and Yu Yongding at CASS for kindly sharing this article.

Yu Yongding is Senior Fellow at the Chinese Academy of Social Sciences and former member of the Monetary Policy Committee of the People’s Bank of China.

China's economy continues to stutter post-lockdown - Macro Polo Insight

While the Covid-19 situation is looking up in Shanghai, the Chinese economy’s outlook is just the opposite. At this point, we are revising down China’s second-quarter growth to roughly 0%, with full-year growth of around 4%.

This downward revision is predicated on factors that were not present during the 2020 lockdown, making that period less apt of an analogy than we previously assumed. Because this time is different, the normalization of economic activity in Shanghai will not lead to the same V-shaped recovery in 2020.

The main differences are 1) stimulus has been much weaker in this round than in 2020; 2) this lockdown hit during what was already an economic down cycle as illustrated by consumer sentiment.

To read this article please visit the Macro Polo site here.

Our thanks to Song Houze of Macro Polo for kindly sharing his insights.

 

The Only Five Paths China’s Economy Can Follow - Michael Pettis

 

'There is increasingly a consensus in Beijing that China’s excessive reliance on surging debt in recent years has made the country’s growth model unsustainable. Aside from the economy’s current path, there are only four other paths China can follow, each with its own requirements and constraints.'

To review this assessment by Professor Michael Pettis, please download his article here which can be found on the Carnegie Endowment for Peace Website.

Our thanks to the Carnegie for kindly sharing this article.

 

 

2Q2022 Macro Outlook: Beijing Aims for Stability First, Growth Second

2Q2022 Key Takeaways:

• The 2022 growth target of 5.5% has become largely meaningless as exigencies force Beijing to pivot to a “stability first, growth second” strategy in the second quarter and likely for the remainder of this political year.
• The assumed correlation between stability and growth is actually rather weak. So long as Beijing can maintain a growth floor of ~4%, it is unlikely to launch a forceful stimulus and instead opting to coast on slower growth while preventing systemic risks.
• A Chinese economy that slows to below 5% will bring further downside risks to an already fragile global economy, potentially leading to stagflation.

The Chinese government’s announcement of a 5.5% growth target at the March National People’s Congress was dead on arrival. Covid-19 has interjected yet again, as lockdowns in Shanghai and other regions of China will make it almost impossible for Beijing to achieve its 2022 growth target.

Beijing will instead pursue a “stability first, growth second” strategy for the rest of this political transition year, when risk tolerance is low. A significant ramp-up of stimulus will only happen when growth risks falling below 4%, still an unlikely scenario in the second quarter.

Ensuring stability without being pro-growth may seem contradictory. But the correlation between growth and stability is somewhat spurious. With a labour force ageing rapidly into retirement, the relationship between jobs and GDP has weakened, which means that social stability doesn’t just fall apart if growth dips below some assumed level.

While Beijing should be able to contain significant economic fallout with a raft of relief lending and programs to help small businesses stay afloat, a dramatic slowdown of the Chinese economy will have spillover effects on the global economy. In particular, China’s slowdown will increase the risk that major central banks’ tightening cycles will push the global economy closer to the edge of a recession.

Please find the full PDF download link here.

Our thanks to Houze Song and the team at Macro Polo for kindly sharing these insights.

4 Questions regarding the Chinese Economy - CLM March 22

Dear CBI Members and Partners,

Please find a paper looking at 4 key questions facing China's economy in 2022 by David Dollar.

Download David Dollar CLM Issue 71 Spring 2022

Our thanks to the China Leadership Monitor for kindly sharing this content.