China Economic Outlook. June 2023

China's economic recovery came to a halt in Q2 after registering a stellar performance at the beginning of the year due to sluggish external demand, anemic domestic housing market and weak market sentiments. Policy stance has shifted from "prudent" to "pro-growth".

Key points

• Key points:
• China’s growth stalled in the second quarter after a very strong start of the year, as the reopening effect ran out faster than anticipated.
• The CPI outturns hover around zero into the second quarter, indicating the unevenness in the recovery as well as weak market sentiments amid the sluggish property market and halted recovery.
• After surprisingly strong performance through April, the country’s export growth fell into a negative territory in May, in line with the trend exhibited by neighboring trade partners.
• The authority has already shifted its policy stance to be more pro-growth, evidenced by recent cuts of a few key policy rates, the first time since August 2022.
• A new round of policy stimulus is in the pipeline, which, we believe, is set to put China’s growth back on the right track in the second half of the year.

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