Chinese growth and recovery is only temporary, according to International Investment firm, EXANTE’s Executive Director, Alexey Kirienko.
Mr Kirienko says: “Whilst recent figures show that China’s Q2 GDP growth exceeded expectations, we believe that this growth is only temporary and has come as a result of the removal of lockdowns and the opening of factories and stores. If you look at historic data, this is still the weakest growth in recent times (China started to publish GDP quarterly growth data in 1992).”
Industry in China is recovering rapidly as government stimulus has focused on helping industrial manufacturing. However, retail sales remain well below last year’s levels. Local consumers haven’t been turned yet into a driver of economic growth. This is an alarming sign as it places significant restrictions on the potential for further recovery. This is especially important for China, especially against the backdrop of tensions with the United States.
“In recent days Chinese markets have been among the ‘leaders’ in the decline, as it is questionable whether growth will continue without relying on domestic demand and incentives or not. In addition, it is a warning signal that in Europe and the United States, consumers can also maintain crisis behaviour patterns – echoing the decrease in the economy. This is a big problem both for the markets of these regions and for China, the world’s major factory,” adds Mr Kirienko.