China: The factors behind weaker growth in 2022

UBP
By November 22, 2021 10:15

China: The factors behind weaker growth in 2022

KEY TAKEAWAYS

  • The Chinese economy is facing headwinds leading into 2022, including: 1) Ongoing regulatory crackdown; 2) Exposure to COVID outbreaks; 3) A slump in the housing sector; and 4) Power shortages over the winter months.
  • As a result and following from a sharper-than-expected slowdown in Q3-21, we have decided to revise our GDP growth forecast for 2022 to 5.0% from 5.5% previously. This points to muted growth in the next quarters.
  • Despite these pressures, an aggressive monetary easing cycle is not upon us. The PBOC will likely stick with its current “cross-cyclical adjustment” stance, before reintroducing moderate counter-cyclical measures in Q2-22.
  • While investors may see some cyclical reprieve in 2022, we favour a more cautious approach. 

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UBP
By November 22, 2021 10:15

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