This weakness “looks entrenched” as Beijing struggles to find a new economic engine that does not rely on exports or property excess, according to a team of JP Morgan Asset Management analysts led by London-based Karen Ward, chief market strategist for Europe, the Middle East and Africa (EMEA).
Relative to the US, an opposite dynamic is currently unfolding in China, says Citi’s chief investment strategist and chief economist Steven Wieting. “Property and trade sectors are much larger shares of China’s economic activity, and the larger structural changes needed to clear major imbalances have not been sufficiently implemented.”
In the near term, these headwinds pose a great challenge for China’s policymakers, adds Wieting in Citi’s 2024 outlook. However, China’s struggles are lowering the cost of goods worldwide at a time when inflation concerns remain high.
