1. Research

Q&A with Yi Xiong

In a new ‘Q&A with’ Yi Xiong, Chief Economist, Asia reviews China’s recent economic performance and shares his insights on what policy makers need to do to stabilize the economy.

Q: How much impact did recent Covid outbreaks have on China’s economy?

A: We estimate that China’s output growth slowed from 6% in January and February to 3% in March, and further to -2% in April. Activity has begun to improve lately but only at a modest pace. We forecast GDP growth will drop to 0.5% in Q2 from 4.8% in Q1.

Q: What are the risks to the economy?

A: The three major challenges under today’s low growth environment are (1) rising unemployment rates, especially among the youth; (2) a prolonged property downturn that raises financial stability concerns; and (3) continued RMB depreciation and capital outflows.

Q: What will policymakers do?

A: We think Chinese policymakers will do whatever it takes to stabilize the economy. They are likely to boost vaccine protection and roll out regular testing in bigger cities to prevent future lockdowns. The fiscal stimulus package could be increased to a size comparable to what was delivered in 2020. The PBOC is likely to cut mortgage rates further and encourage bank property lending to support the housing market.
Deutsche Bank Research clients can access the full report here:

© Copyright 2024. Deutsche Bank AG, Deutsche Bank Research, 60262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite “Deutsche Bank Research”.

The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, licensed to carry on banking business and to provide financial services under the supervision of the European Central Bank (ECB) and the German Federal Financial Supervisory Authority (BaFin). In the United Kingdom this information is approved and/or communicated by Deutsche Bank AG, London Branch, a member of the London Stock Exchange, authorized by UK’s Prudential Regulation Authority (PRA) and subject to limited regulation by the UK’s Financial Conduct Authority (FCA) (under number 150018) and by the PRA. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Inc. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product.