China’s current modest economic growth will likely extend through 2024. For the third year in a row, China’s strict zero-covid policies are hurting firms and crippling household confidence. The struggles of the real estate and construction sector will also continue with no quick fixes in sight. Lower global growth clouds prospects for Chinese exporters. With structural factors already depressing growth, China’s long-term outlook has become even bleaker with intensified superpower competition and geopolitical tensions. There is also a risk from the shift to domestic policies emphasising ideology and nationalistic priorities as they may conflict with policies strengthening economic growth. Soaring indebtedness, possible contagion from the real estate sector to the wider economy and continuation of zero-covid policies have already heightened risk to financial markets. Lowered growth expectations increase downside risks and make it harder to tackle emerging issues. The economy is in a weaker position to apply countercyclical stimulus measures than in previous years. Geopolitical risks have also increased.

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