China Economic Outlook. December 2022

Summary

The Chinese economy has experienced a bumpy recovery amid a disordered relaxation of "zero Covid" policy and a housing market adjustment. We maintain our 2022 growth projection at 3.6% while lowering 2023 GDP growth to 5.0% from 5.2%.

Key points

• Key points:
• Chinese economy has relaxed its "zero Covid" policy recently, but in a seemingly disordered manner.
• Although the authorities have promulgated the "16-point Plan" to support the housing market, its effectiveness is still challenging ahead.
• Deflation risks are on the rise, due to weak domestic demand, sliding global commodity price and expansionary imports from Russia.
• The 20th National Congress of the Chinese Communist Party draws the blueprint for China's long-term outlook.
• Monetary and fiscal policy remain easing but are anticipated to be prudent to avoid a deluge of massive stimulus.

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