Qatar National Bank expects the Chinese economy to continue on the right track to achieve a strong recovery during the current year, driven by a group of positive factors, most notably the significant growth in the manufacturing sector and economic reopening, as well as the increase in consumer demand for luxury services that are not connected to the Internet.
The bank stated, in its weekly report, that regulatory clarity in key technology sectors reduces business uncertainty and promotes private sector investment and innovation, noting that despite market doubts about the duration and strength of the Chinese recovery, Chinese growth may surprise in the direction. bullish.
The report pointed out that China, which is a pivotal economic power, has been able to contribute nearly 40% of global GDP growth since the global financial crisis, and has overcome a series of large fluctuations in recent years, as it achieved, after the initial outbreak of the Corona virus “Covid-19”. 19″ In the first quarter of 2020, significant GDP growth of 18.7% in the recovery peak stage, and maintained positive momentum from mid-2020 to mid-2021, during which time, China was the first and only major economy to grow positively in GDP in 2020.
He added that a group of domestic factors had since led to a clear economic slowdown in China, noting that it was as a result of the implementation of the “zero Covid” policy, which was characterized by closures in major cities, restriction of bank lending activities for the heavily indebted real estate sector, and the imposition of strict regulatory restrictions on Across sectors, a stagnation in real GDP growth occurred in the second quarter of last year that resulted in China’s worst economic performance in decades. Moreover, the expected recovery did not occur in the second half of 2022 due to the outbreak of a new wave of “Covid-19”. and the resulting nationwide lockdowns late last year.
Qatar National Bank relies on its optimistic expectations about the Chinese economy on several main factors, including that the main indicators of activity in China already indicate a further recovery, as the purchasing managers’ index for the manufacturing sector in China shows a significant acceleration in manufacturing activity, despite the slowdown. The remarkable global growth and decline in manufacturing activity in many major economies around the world.
The report added that the process of economic reopening, which is proceeding in full swing, is also pushing the exhausted service sector in China, as data shows that traffic congestion is still high and exceeds the levels of 2020-2021, in addition to the high growth in the number of subway passengers on an annual basis. In addition to the recovery of oil demand to higher levels than it was before the pandemic, in addition to the increase in the implied demand for oil from scheduled domestic flights.
According to the report, consumption during the Chinese New Year holiday indicates a strong initial recovery, with high-end and medium-to-high-end luxury service sectors outperforming, as offline consumer service sectors, such as tourism, movies and restaurants, experienced a strong recovery in demand during the Spring Festival holiday, In addition to the recovery in spending on domestic tourism trips and the receipt of movie ticket receipts to the second highest level ever, as rates of increase in demand for non-internet luxury consumption services exceeded expectations.
The report indicated that Chinese authorities continue to abandon open regulatory changes in key technology sectors, adding that over the past several quarters, comprehensive regulatory reviews in some industries, such as private education, financial technology, e-commerce, food delivery, and taxi applications, have led to Causing uncertainty in business, which has partially prevented new investment and even innovation in related activities, but in recent months the authorities have begun to finalize their regulatory reviews, provide clearer guidance to companies and issue more formal licenses to operate to important companies that have been operating Previously in “unclear circumstances”, which has reduced business uncertainty, which supports the recovery of private sector investment and innovation.
