Wednesday, December 6, 2023

Risks and opportunities after the reopening of China

China has recently reopened its doors after an unprecedented closure of its economy. Transformed by this challenging health crisis episode, the country is undergoing numerous changes, whether they are political, social, or economic. While it remains a land of opportunities for businesses, some balances seem precarious: a trade war with the United States, heightened tensions with Taiwan, a rapprochement with Russia, and complex relations with other Western powers. Is the world’s second-largest economy still as indispensable for businesses as it once was?Two experts from Coface reveal the risks and opportunities of this country for businesses, in light of tumultuous current events. Bernard Aw is Chief Economist for the Asia and Pacific region, and Raphaël Rousselot, Chief Underwriting Officer Asia Pacific.Don’t have time to read? Listen to this full episode of Trade Talk on your favourite platform, or on our website. Bernard, can you describe the economic situation in China right now? 

China’s economy was unable to fully recover from the shock of the pandemic as consumption was constrained by the zero-covid policy, in addition to regulatory action on sectors such as housing, technology and education. The removal of strict Covid-19 restrictions was therefore generally seen as positive for the Chinese economy. In the early months following the end of zero-covid policy, economic activity, particularly services, showed a solid rebound. In the first two months of 2023, industrial output was up 2.4% year-on-year, retail sales rose 3.5%, and fixed investment growth came in above expectations at 5.5%. The post-Covid recovery was earlier than expected.Politically, Chinese president Xi Jinping was able to strengthen his power base, replacing key economic positions in the government with people that are known to be loyal to him, such as new premier Li Qiang. Raphaël, after…

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