China's economy poised for a mild recovery despite its volatility, say analysts
China's economy is forecasted to undergo a mixed recovery in the coming months, according to Larry Hu, chief China economist at Macquarie Group. Although supportive policies have started to show positive effects in September, the nation still faces challenges including a weak property market and uncertainties in the global economy, stated Hu. The economy witnessed a modest improvement in trade performance last month, but deflationary pressure and sluggish domestic demand continue to persist.
People's Bank of China confident in its ability to support the economy
The People's Bank of China assured that it has ample policy space to bolster the economy. The narrowing decline in exports and imports, coupled with the rise in China's total trade surplus, provides a margin for managing the exchange rate and potentially stabilizing the US dollar-yuan exchange rate, said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.
Export outlook varies across China's major trading partners
While exports to Russia experienced a notable increase, exports to the Association of Southeast Asian Nations (ASEAN), the United States, and the European Union declined. Shipments to ASEAN and the US extended their contraction streak, while exports to the European Union saw a narrower decline. This mixed picture adds further complexity to China's export outlook.
China's GDP growth expectations and the utilization of local government bonds
Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, predicts that China's economy will grow by 5.2% this year, driven by exports, slight improvements in consumption, and manufacturing investment. She expects a continued growth of 4.2% in 2024, relying on fiscal and monetary stimuli. Additionally, Garcia-Herrero anticipates the issuance of local government bonds to prevent a sudden drop in growth in 2024.