Key Takeaways


  • Chinese economic data continue to fall short of consensus expectations across a range of key indicators, while high profile troubles in the property and ‘shadow banking’ sectors have increased the risks of a more serious downturn.
  • Indeed, we expect structural headwinds, particularly from the real estate sector, to weigh on growth through to 2025.
  • In particular, property weakness is likely to keep the stock of excess household savings unspent. But a normalisation of the savings rate – which is yet to return to pre-pandemic norms – should still provide some support to growth.
  • The plethora of incremental policy easing has pushed financial conditions into moderately accommodative territory, implying that policy should start to gain traction and guard against worse outcomes. But a continued focus on de-risking and self-sufficiency means additional stimulus will remain piecemeal and may struggle to change sentiment.
  • Both downside and upside risks around this baseline have risen. By keeping the policy response too tentative, de-risking could spark the crisis it seeks to avoid. On the other hand, a more forceful policy response could unlock the ‘coiled spring’ of excess savings and lead to a growth surge. 


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