Pessimism about China's economy grows

Economists’ expectations for the Chinese economy in 2022 are deteriorating due to the ongoing COVID-19 cases and the turmoil in the real estate sector. Economists’ growth expectations for this year fell from 3.9 percent to 3.5 percent in Bloomberg’s latest quarterly survey. Expectations for the first 3 quarters of next year also fell, while the median estimate for 2023 remained unchanged at 5.2 percent. The decline in expectations shows that Beijing’s 1 trillion yuan stimulus package to support growth and the interest rate cuts by the People’s Bank of China are not convincing to economists. Wells Fargo International Economist Brendan McKenna stated that there are downside risks to growth due to the turmoil in the real estate sector and COVID-19 quarantines, and said, “Our base case is that the economy will grow slightly above 3 percent this year. However, if economic activity slows, this forecast could be lower than that.” The quarantines implemented in major cities such as Shanghai have increased pressure on the business world and consumers this year. In the real estate sector, some home buyers are refusing to make payments due to undelivered projects, and some factories are temporarily halting production due to rising temperatures and drought. The Chinese government's growth target for this year is 5.5 percent. However, for the first time, the figure is expected to fall well below this target.