China Economic Outlook. October 2022

Chinese economy has experienced a bumpy recovery after the Shanghai lockdown was lifted. We lowered our 2022 prediction from 4.5% to 3.6%.

Key points

• Key points:
• China still sticks to “Zero Covid” policy which hindered consumption and supply side recovery.
• Real estate crash: main housing indicators staying in negative territory for the past half year, which adversely spilled over to its upstream and downstream sectors.
• The authorities gave up the 5.5% growth target, indicating monetary and fiscal stimulus will become more prudent instead of a deluge of massive stimulus going forward.
• China’s low inflation environment persists due to the sluggish domestic demand.
• Monetary and fiscal policy remain easing stance but is anticipated to become more prudent to avoid a deluge of massive stimulus

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