UOB Group’s Economist Ho Woei Chen reviews the lates results from key Chinese fundamentals.

Key Takeaways

“The slump in China’s PMIs continued into Dec as its COVID-19 outbreak worsened following an abrupt pivot from its zero-COVID policy on 7 Dec.”

“Both the official manufacturing and non-manufacturing PMIs printed below expectation and fell past their lows during the Shanghai lockdown in Apr-May 2022, to their lowest since Feb 2020.”

“We are updating our GDP forecasts for 2022 and 2023 to account for the weaker-than-expected data in 4Q22 to-date as well as sooner-than-expected borders reopening in China which will likely contribute to a sharper economic rebound this year when herd immunity is achieved. China will reopen its borders to international travelers from this Sun (8 Jan). Furthermore, the National Bureau of Statistics had revised China’s real GDP growth to 8.4% for 2021 (previous 8.1%), a higher base comparison for 2022.”

“We expect 4Q22 GDP growth to slow to 2.2% y/y from 3.9% y/y in 3Q22 amid the COVID outbreak. Our updated forecasts for China’s 2022 and 2023 GDP growth are now at 2.8% (from 3.3%) and 5.2% (from 4.8%) respectively.”