Disappointing post-COVID-19 recovery. China on the path of a protracted slowdown
Disappointing post-COVID-19 recovery. China on the path of a protracted slowdown

Author(s): Maciej Kalwasiński
Subject(s): National Economy, Economic policy, Government/Political systems, Health and medicine and law, Financial Markets
Published by: OSW Ośrodek Studiów Wschodnich im. Marka Karpia
Keywords: COVID-19 pandemic; China; zero COVID strategy; Chinese economy; economic security; GDP;
Summary/Abstract: China’s economy started the year with a clear upturn after the ‘zero COVID’ strategy was lifted, but the macroeconomic data published in recent weeks has clearly fallen short of expectations. The situation has caused disquiet in Beijing and among those economists who expected the robust rebound to continue. In order to stimulate economic activity, the People’s Bank of China has made a slight cut to interest rates. Moreover, respected foreign media outlets have reported that the government is readying a stimulus package with investments in infrastructure as its core component. The aim of these slightly more expansionary monetary and fiscal policies is to bolster economic growth in the second half of the year, but their effectiveness will be limited. Low economic confidence among households and businesses remains a barrier to increased activity. China’s economy has entered a period of structural slowdown as it grapples with the cumulative costs of the rapid economic expansion over recent decades, deteriorating public sentiment and an unfavourable international environment. Beijing’s options for stimulating the economy are narrowing and the priorities are shifting: the imperative to boost GDP is giving way to economic security.

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