Christoph Siepmann, senior economist at Generali Investments
China’s Q3 GDP growth surprised on the upside with 3.9% yoy. This prompted us to
revise our growth forecast to 3.2% for 2022 (from 2.7% before). However, given the
repeated Covid outbreaks and the ongoing problems in the real estate sector, which
likely also extend into 2023, we revised down our 2023 outlook to 4.8%. We expect
China’s economy to stay on a bumpy path (fresh Covid lockdowns reported in major
cities) and the real estate sector to improve only gradually.
In contrast to a long-standing tradition of only two terms, China’s Communist Party
(CCP) Congress confirmed President Xi for a third period as General Secretary. All fresh
members are said to be close Xi allies, instead of representing (as before) different
factions of the CCP. The Party Congress typically discuss structural instead of cyclical
issues. There are neither stronger signs that the Covid policy will change soon, nor that
the government would change course concerning its longer-term de-leveraging policy
in the real estate sector. National security was broadly discussed, and “common
prosperity” elevated as a core principle to the Party’s constitution. This suggests that
the regulatory reform will continue.