JP Morgan: Chinese growth is on track to return to its pre-Covid trend

JP Morgan: Chinese growth is on track to return to its pre-Covid trend

China

China's economy was the first to be hit by the Covid-19 pandemic this year, but its recovery is on a much stronger trajectory than many other countries across the world. Policy actions from Beijing have so far been successful in preventing a second wave of infections, which in turn has allowed the economy to pick up speed.

Consensus estimates point to Chinese growth returning to its pre-Covid trend in the coming months – a feat that is all the more impressive given that domestic stimulus has been much more measured than some of the surges witnessed in government spending following prior economic downturns. Chinese stocks have benefited from the relative outperformance of the economy, with MSCI China being one of the few indexes that has managed to roughly keep pace with the boom in US growth stocks so far this year.

Real GDP levels, indexed to 100 in Q1 2006

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Source: BEA, Bloomberg, Eurostat, National Bureau of Statistics of China, ONS, J.P. Morgan Asset Management. Forecasts are from Bloomberg contributor composite. Data as of 30 September 2020.