China’s cyclical recovery to be delayed by new wave of COVID-19 cases – The Peninsula

China’s cyclical recovery to be delayed by new wave of COVID-19 cases – The Peninsula

Doha: China remains a major source of uncertainty for the global growth outlook. After a collapse in demand and activity in Q1 2020, following the initial outbreak of COVID-19, China performed an impressive GDP growth of 18.3 percent at peak recovery. 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.

Nevertheless, over the last several quarters, domestic factors have contributed to a steep economic slowdown in China.

This was driven by their Zero Covid policy with lockdowns across Chinese tier-1 cities, restrictive bank lending to the overleveraged real estate sector and aggressive regulatory clampdowns across industries. As a result, China’s Q2 real GDP growth in 2022 was stagnant with the worst economic performance in decades.

Despite the above-mentioned challenges, there were early signs that China was about to turn the corner from its recent economic slump. Chinese policymakers were becoming more concerned about the economic slowdown and started to ease policy more aggressively. In recent months, the People’s Bank of China (PBoC) trimmed interest rates more than once for several segments of the market,