Recent economic indicators indicate that the Chinese economy has experienced growth in recent months, placing the country on the right track to achieve the government’s annual goal of 5% GDP growth. This makes Beijing’s expectations feasible, as recent positive Purchasing Managers’ Index (PMI) data from the country have reinforced this view.
Official Purchasing Managers’ Index data released last week showed that the manufacturing sector in China returned to growth in March, while non-manufacturing activity rebounded. These data were further complemented by private PMI surveys showing improvement in both manufacturing and services activity.
However, on the other hand, it is expected that headwinds from the real estate market will persist, while a widespread contraction trend in China is also anticipated to continue. While the Lunar New Year holiday helped stimulate some consumer spending from January to February, this support is likely to taper off in March, especially amidst decreasing food prices.
While the Chinese economy has shown some signs of improvement so far in 2024, it still has a long way to go to return to pre-COVID-19 growth levels. Additionally, the government’s reluctance to introduce further stimulus measures has left investors demanding more.
