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Macroscope | China’s economy could easily defy the naysayers this year
- In a repetition of 2021, when the economy boomed in the wake of the 2020 Covid-19 crisis, China could surprise on the upside this year after the lifting of zero-Covid restrictions
- If growth hits 6 per cent, China’s markets could see stellar stock performance
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The world is still facing major challenges but are forecasters being too downbeat on China’s growth potential in 2023? The strongest reading in China’s manufacturing business confidence in over a decade suggests that mainland factories are booming again post-lockdown as the economy catches up with pent-up demand, not just domestically but from abroad too.
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In a repetition of 2021, when the economy boomed in the wake of the 2020 Covid-19 crisis, China could easily surprise on the upside this year after the lifting of zero-Covid restrictions, with growth likely to exceed even Beijing’s modest 5 per cent target for 2023.
The chances of reaching 6 per cent growth could even be on the cards. If that’s the case, China markets could see some stellar stock performance this year.
The official manufacturing sector’s purchasing managers’ index (PMI) from the National Bureau of Statistics in February came through at an extremely strong 52.6, a potential game changer for expectations on where the economy might be heading this year.
It’s a big leap from January’s 50.1 reading, well above the 50 boom-bust mark – the dividing line between growth and contraction in the manufacturing sector – and the strongest level of activity indicated since April 2012. It’s not an isolated case either as other business confidence indicators are showing similar profiles of sharp recovery.
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