Tan was commenting on the “state of the union” style speech that President Xi Jinping gave at the recent 20th National Congress of the Chinese Communist Party. He won an unprecedented third term and laid out the country’s general direction for the next five years. She noted that it was particularly important now given all of the macro-political tensions with the U.S., Taiwan, and Russian invasion.
Tan said there are still questions, going into 2023, about whether China’s economy will slow even further after its long string of zero-COVID lockdowns.
“They’ve been doing a little bit of stimulus, but that’s relatively small in size,” said Tan. “China has not been tightening in the way that the U.S., or the rest of the world, has. So, from a policy perspective, they’ve actually been going the other way.
“The main reason why you’re not seeing it show up in economic growth is because of their zero-COVID policy. Even though they’re spending a bit more on fixed asset investments, that’s being overshadowed by zero-COVID hampering consumption. So, you’re not seeing the pick-up. But, if at some point, the zero-COVID policy becomes even more relaxed, you could see that side of the economy pick up again, which would be great for the global growth picture.”
Tan noted that Xi is not walking back China’s zero-COVID policy yet, even though China has been moderating how it’s being implemented with more recent two-week rather than months-long lockdowns. It’s also started implementing closed loop manufacturing, so the factory staff lines are contained. So, if one line catches COVID, the others can still continue.
