UOB Group’s Economist Ho Woei Chen, CFA, assesses the recently announced measures to support growth in the Chinese economy.

Key Takeaways

“China’s State Council has announced a set of 33 measures to support businesses, stabilise industries and supply chains, boost consumer spending and investments.”

“We estimate that the quantifiable measures in the policy package may be worth around 2% of GDP and partially mitigate the economic impact from the Covid-19 curbs in Apr-May. Shanghai accounts for 3.8% of China’s GDP and around 20% of total trade and thus the containment curbs and spill-over effects are likely to have cost around 1% of China’s GDP.”

“The worst is probably behind us (as seen in the rebound in May PMIs) but risks remain elevated due to China’s zero-covid strategy, weak outlook in the domestic real estate market, Russia-Ukraine conflict, sustained commodity prices and the withdrawal of monetary policy accommodation by the global central banks.”