China’s growth outlook muddied by plethora of uncertainties – The Peninsula

China’s growth outlook muddied by plethora of uncertainties – The Peninsula

China is a major source of uncertainty for the global growth outlook in 2022 and 2023. After a sudden collapse in demand and activity in Q1 2020, following the outbreak of COVID-19, China performed an impressive recovery from the pandemic. The positive momentum lasted from mid-2020 to mid-2021. China at that time was the first and only large economy to present positive GDP growth in 2020, being ahead of other countries in the economic cycle by several quarters. While the strong performance led to an early withdrawal of both fiscal and monetary stimulus, the government also started a comprehensive campaign to tighten regulation on the real estate and corporate sectors, dampening business sentiment and containing a more significant rebound in private investments.

As a result, the recovery in China slowed down significantly since Q2 2021. In light of this, Chinese policymakers started to gradually revert from policy tightening to policy easing in late 2021 and early 2022, aiming to create more breathing room to the private sector. This provided some support to the economy, as a significant pick up in investments boosted GDP growth to 4.8 percent in Q1 2022, the first quarter of accelerating activity after the period of peak