The Chinese economy grew better-than-expected at 3.9 percent YoY in 3Q22, bettering the 0.4 percent growth reported for 2Q22. During 9M22, the Chinese economy expanded 3.0 percent, buoyed by the relaxation of lockdown measures in major cities such as Shanghai, allowing its manufacturing sector to recover. The government economic stimulus measures, with a combined worth of more than CNY1 trillion, also helped bolster the Chinese economy.
China's Zero-COVID policy, which will be continued in 2023, may continue to pressure the Chinese economy, going forward. After the 20th National Congress of the Chinese Communist Party, October 16-22, 2022, it is expected that observers will be paying close attention to China’ Zero-COVID policy, which will likely be continued at least until 2023, while certain details of the measure will be eased. However, China may not open the country to international tourists nor ease important restrictions or COVID-19 coexistence measures like other countries.
China has begun to experience more constraints in the implementation of its accommodative monetary and fiscal policies during the remainder of 2022. It may have to consider more factors in using an extra budget to bolster the economy or relax its monetary policy such as inflation and differences in its monetary policy stance as compared to that of the US as such divergence may cause the Yuan to soften further.
In summary, it is expected that the Chinese economy will grow 3.4 percent in 2022 amid numerous challenges, including the Zero-COVID policy that will continue to dampen consumer and business confidence, plus the unsolved real estate sector.