Investors are pegging back their expectations for the world’s second-biggest economy as worries mount that its recovery from pandemic restrictions has lost momentum.
Recent data suggest gross domestic product growth this year will be closer to the government’s target of about 5%, contrary to expectations of a large overshoot formed earlier in the year. The figures also show a lopsided rebound that’s being led by consumer services, while industrial activity lags far behind.
“People are adjusting their China recovery expectations lower,” said Chaohui Guo, an analyst at investment bank China International Capital Corp.
In equity markets, the CSI 300 Index has given up about half its gains from the so-called reopening trade that started in November, while the yuan is signaling an economy in distress after breaking through the closely-watched 7-per-dollar level.
In the crisis-ridden property market, sales are slowing after an initial rebound. Combined with the persistent financial troubles of real estate developers, that’s hampering new projects in a sector which accounts for about 20% of China’s GDP after including related sectors. Infrastructure spending is being constrained by the hefty debt loads of local governments, symbolized this week by an 11th hour bond repayment by a state-owned firm.
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