Three years of isolation: first in, last out
Hopes that China will meet or even exceed 5% real GDP growth this year are warranted. The key driver will be consumption, fuelled by excess household savings and a pro-business policy stance.
However, a faster and more durable recovery will require additional policy measures, not yet in place, to structurally increase the share of consumption in Chinese GDP. China’s economic divergence from slowing growth and recession in the developed world bodes well for China’s corporate profits and cash flows, making it an attractive source of macroeconomic diversification and a compelling destination for equity and fixed income flows over the remainder of 2023.
