China’s Economy Still Faces Headwinds Despite Early Signs of Recovery
Wall Street JournalSep 15, 2023
The Facts
On Saturday, China's National Bureau of Statistics revealed that factory activity had expanded for the first time in six months in the PRC.
The bureau claimed that the manufacturing Purchasing Managers’ Index (PMI) rose from 49.7 in August to 50.2 in September. Non-manufacturing PMI also reportedly rose from 51.0 to 51.7.
The Spin
Narrative A
Signals indicate a tentative stabilization in China's economy following months of sputtering. A spurt in retail sales, a marginal decline in urban unemployment, and increased investment in manufacturing — all hint at a cautious cyclical recovery. Policy support from the PRC at this crucial juncture could now go a long way in strengthening this revival.
Narrative B
There is reason for caution here — managers of China's economy cannot rest until the property market is stabilized. August saw the steepest fall in new home prices in 10 months even as investment declined for an 18th straight month. There are major irregularities in this sector which must also be taken into account.
Nerd narrative
There's a 50% chance that China's GDP will be at least 31.56 trillion USD at the end of 2025, according to the Metaculus prediction community.