China | A bumpy V-shape recovery in Q3

Summary

The Chinese economy has experienced a bumpy V-shape recovery after the Shanghai lockdown was lifted, with Q3 GDP higher than expected.

Key points

• Key points:
• Supply side recovery is faster than the demand side, similar trend since Wuhan lockdown.
• Q3 GDP is higher than expected to reach 3.9% y/y, making our 3.6% 2022 forecast easier to achieve. We lower our 2023 GDP forecast to 5%.
• The economy was dragged by two main risks: “Zero Covid” policy and Real estate crash.
• From a policy perspective, the authorities gave up the 5.5% growth target, indicating the policy will become more prudent without a deluge of massive stimulus.
• The 20th National Congress of CCP emphasizes the new growth model; and also emphasizes to achieve a “socialist modernization” target in 2035 with GDP or GDP per capita doubled, thus, annual GDP growth has to reach 4.5-4.7% during 2020-2035.

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