• China’s economic growth stalled in the second quarter of 2022, due to the negative impacts of the country’s public health policy response to COVID-19. The question now is how do Chinese policy makers respond to this outcome? Until recently, public statements from China’s leaders continued to endorse the annual growth target of 5.5% – a highly ambitious target even when it was initially announced in March and virtually impossible after the Q2 national accounts. That said, some support to boost the economy appears likely, although it may raise debt levels, increasing long-term risks.
• Given the downside risks, and the poor outcome in Q2, we cut our full year forecast for China’s growth to 3.5% in July.

For further details, please see the China Economic Update (August 2022)