Chinese economy experiences an unprecedented recovery after months of stagnation

After social protests, China abandoned its restrictive lockdown policies at the end of 2022, which had been depressing the economy. The effects are already visible in the first quarter GDP reading. The market is counting on the recovery in the world's second-largest economy to benefit global trade and boost GDP. However, in the longer term, the extremely unfavorable demographic situation in China and the trend of deglobalization, i.e., the division of the world into two geopolitical camps and the associated "nearshoring," will be obstacles.

"The opening of the Chinese economy is a hope for the world in 2023. It is widely expected that if the Chinese can go shopping, it will cause a demand shock, and the fact that the Chinese will return to work will cause a supply shock, and therefore the global economy should benefit from this," Tomasz Korab, CEO of EQUES Investment TFI, said.

"However, it seems that it will be a short-lived boost because even the ruling Communist Party in China regularly lowers its planned target for economic growth. The issue of how this will affect global inflation is also problematic because increased demand could mean increased pressure on prices," Tomasz Korab added.

(Newseria)