Half a Year into China’s Reopening after COVID, Private Economic Activity Remains Weak

Delivering sustainable economic growth
Aug 14, 2023 | Peterson Institute for International Economics

In 2022, when much of China was under zero-COVID lockdowns, private investment growth was still positive. But at a time when there are no zero-COVID restrictions on movement anymore and much monetary policy easing, the present outright contraction reflects ominously on the vitality of private enterprises in China, note Huang and Mary Lovely in their article for the Peterson Institute for International Economics. The high youth jobless rate also reflects a surge in the number of college graduates of 1.5 million in 2022 and a further increase of one million in 2023, compared with an average yearly increase of only 280,000 in colleague graduates between 2016 and 2021. The overall picture painted by China’s 2023Q2 GDP estimates is one of an economy failing to sustain the rebound that followed the lifting of the stringent zero-COVID policy. Both private sector investors and households appear to be mired in uncertainty and anxiety, as the government struggles to reassure and motivate them back to activity.

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