JP Morgan AM: Consumer sentiment is key to supporting China's recovery
JP Morgan AM: Consumer sentiment is key to supporting China's recovery
A post-Covid bounce back has so far remained elusive for the world’s second largest economy, but recent economic data suggests that there could be tentative signs of an improvement in the Chinese macro picture. In the first quarter, China GDP grew at a 5.3% annualised rate, much higher than expected.
Importantly, though, consumer confidence remains weak and is yet to recover to pre-pandemic levels. The ongoing slump in the real estate sector has had a profound impact on overall sentiment given 60% of Chinese household wealth is tied up in property. The poor performance of Chinese stocks over the last couple of years has exacerbated this negative wealth effect. Chinese households are also increasingly less confident about their future income prospects. More robust support measures from the government are therefore likely required for consumers to find their feet and to support the economy on a sustainable basis.
