China is experiencing an extraordinary amount of turbulence due to its abrupt reopening. This tumult is creating immense uncertainty for executives who are trying to determine how to forecast and serve demand. Taken at face value, China’s 2022 numbers—the second worst in decades—show how badly the economy has been hit by zero-COVID policies.
In normal times, this would be a difficult task, but executives are flying half blind because China releases little data in January and February (due to distortions from the Lunar New Year) and the COVID-related information that is being released is unreliable.
Despite these difficulties, there are good reasons to be optimistic. Although a rebound will take time to materialize, given China’s chaotic reopening. The hangover from China’s zero-COVID U-turn will last until at least late March or even April, given the huge scale of the current outbreak and its disruptions to business activities. But we hope that China’s reopening will give the economy a much-needed push and provide substantive opportunities for companies, particularly in H2.
The rapid reopening will ultimately give a much-needed boost to China’s troubled economy. As the government steps up its efforts to inject more capital into infrastructure building, and as ordinary people repair their personal finances and start to spend again, the H2 rebound is likely to be strong, pushing China’s annual growth rate above 5%.
China’s rapid zero-COVID exit has cheered executives hunting for growth, even as a lack of reliable information has left them struggling to adjust their plans. Plan to gain some clarity in March after the CNY travel period ends and China’s Jan-Feb data is released. In the meantime, if you are looking for guidance on what to expect in the coming quarters, updated scenarios for the real estate sector, and actions they can take to prepare, you should review our updated China Market Review.
Download an executive summary of our most recent China Market Review
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