Thanks for joining me. China’s ambition to become the world’s largest economy is facing challenges due to the consequences of zero-Covid policies.
A recent study by Bloomberg Economics suggests that China’s gross domestic product (GDP) will not surpass that of the US until the mid-2040s. Even then, it may only lead by a small margin before falling back behind.
Prior to the pandemic, experts projected that China would claim the top spot as the world’s largest economy by the early 2030s.
The study also highlights the weakening momentum of China’s post-Covid recovery. This is attributed to a downturn in the property market and diminishing confidence in Beijing’s economic management.
The report warns that a lack of confidence could become entrenched, putting a long-term drag on China’s growth potential.
Meanwhile, the latest survey of China’s services sector in August revealed a slowdown in output expansion, marking the slowest pace since the lifting of Covid restrictions. The economy has been impacted by uncertainty in the property market and a gloomier economic outlook.
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What happened overnight
Asian stocks declined following disappointing services data from China, adding to concerns about the country’s economic situation.
Hong Kong shares led the regional equity decline, with the benchmark index dropping by more than 1%. August’s industry survey revealed the slowest growth in China’s services sector this year, further indicating that the economic recovery is losing momentum.
The MSCI Asia Pacific Index is on track for its first decline in seven days, while Japan’s Topix fell by 0.3%. Australian stocks and the Aussie dollar remained relatively unchanged after the country’s central bank kept interest rates steady for the third month in a row, in its final meeting under Governor Philip Lowe.
Wall Street was closed on Monday due to a national public holiday.
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