China | Real estate stimulus and loosening “zero Covid” policy help rebuild sentiments

Summary

Amid economic slowdown, recently, the authorities promulgated policy stimulus on the housing market and at the same time loosened “zero-Covid” policy restrictions to tackle these two main risks of the economy.

Key points

• Key points:
• Chinese economy has experienced a bumpy recovery after the Shanghai lockdown was lifted, due to the two main downside risks: housing market crash and “zero Covid” policy.
• The initiatives of the recent “16-point plan” by the PBoC and CBIRC to support real estate market soft-landing are expected to help rebuild market sentiments.
• Chinese authorities also started to ease the previously strict “zero Covid”, chief among them is to shorten the quarantine length for overseas travelers from “7+3” to “5+3”.
• However, October activity indicators remained lackluster and worse-than-expected, due to the recent large number of Covid-19 affected cases, indicating the economic recovery will be quite bumpy.
• Based on these two important policy moves, we maintain our 2022 prediction at 3.6% and anticipate growth will bounce back to 5.3% in Q4.

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