{"id":5101,"date":"2023-01-11T17:24:59","date_gmt":"2023-01-11T17:24:59","guid":{"rendered":"https:\/\/ameforum.net\/?p=5101"},"modified":"2023-01-14T12:12:35","modified_gmt":"2023-01-14T12:12:35","slug":"china-makes-surprise-policy-u-turns-in-quest-for-growth","status":"publish","type":"post","link":"https:\/\/ameforum.net\/ar\/china-makes-surprise-policy-u-turns-in-quest-for-growth\/","title":{"rendered":"China Makes Surprise Policy U-Turns in Quest for Growth"},"content":{"rendered":"\n

By: Malcolm Scott
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Hello. Today we look at how the outlook for China\u2019s economy is brightening after Beijing\u2019s surprising policy U-turns, the potential fallout in France from the government\u2019s new pension overhaul and which segment of the US labor market leads the \u201cquiet quitting\u201d movement.<\/em><\/p>\n\n\n\n

Going for Growth<\/h2>\n\n\n\n

China\u2019s run of policy U-turns is spurring optimism that an economic rebound will soon follow.<\/p>\n\n\n\n

The abrupt scrapping of strict Covid restrictions in early December has been swiftly followed up by other market-friendly changes, as Bloomberg News reports here<\/a>. China is ending a two-year ban on Australian coal imports, easing up on tech giants like Alibaba and dialing back the stringent \u201cthree red lines\u201d that exacerbated a property meltdown.<\/p>\n\n\n\n

\"Property
Residential buildings in Zhengzhou, Henan province, China, on Thursday, Jan. 6, 2023. Photographer: Qilai Shen\/Bloomberg<\/figcaption><\/figure>\n\n\n\n

Hao Hong, chief economist at Grow Investment Group, called China\u2019s recent changes \u201cbreathtaking,\u201d noting there were \u201cpolicy pivots in just about every single sector.\u201d<\/p>\n\n\n\n

\u201cThe environment is more friendly but clearly there are lingering concerns,\u201d he said. \u201cImplementation, consistency and follow up are key.\u201d<\/p>\n\n\n\n

For now, market players are enjoying the ride up. Tech giants Alibaba and Tencent have gained some $100 billion of market value in 2023, after a year that saw both shed more than a quarter of their capitalization, while the MSCI China Index is up roughly 50% since reaching an 11-year low in October.<\/p>\n\n\n\n

China\u2019s economy is now forecast to expand by 4.8% this year, compared with little growth in the US and a potential contraction in the euro zone, according to data compiled by Bloomberg. Some are even more optimistic. <\/p>\n\n\n\n

Morgan Stanley just raised its 2023 GDP growth target by another 0.3 percentage point to 5.7%, betting the near-term pain of a fast reopening will be compensated by an earlier and stronger recovery.<\/p>\n\n\n\n

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\u201cWe believe the market is under-appreciating the far-reaching ramifications of reopening and the possibility that a robust cyclical recovery can occur despite lingering structural headwinds,\u201d economists including Robin Xing wrote in a note Monday. \u201cEconomic, regulatory and Covid policies are aligned for the first time in four years, likely resulting in stronger spillover from existing and upcoming easing.\u201d<\/p>\n<\/blockquote>\n\n\n\n

So what\u2019s led to the changes? Well, in China\u2019s opaque political system, no one can really be sure. President Xi Jinping secured a third term in October, so perhaps he\u2019s calling for the turnaround.<\/p>\n\n\n\n

Or maybe it stems from a broader recognition that the previous policies were doing too much harm to the economy. Rare anti-lockdown protests may have also contributed to the shift away from Covid Zero settings.<\/p>\n\n\n\n

Whatever the impetus, investors are hoping the growth-friendly stance will endure.   <\/p>\n\n\n\n

\u201cWe will see fewer policies in 2023 that lead\u00a0to market shocks and loss of market confidence, given some lessons that Beijing (or Xi in particular) learned about messing with key sectors,\u201d said Adam Ni, publisher of the China Neican newsletter on Chinese politics. \u201cBut will I bet my house on it? No. We just don\u2019t know.\u201d<\/p>\n\n\n\n

The Economic Scene<\/h2>\n\n\n\n

French Stop Working Earlier Than Peers<\/h3>\n\n\n\n

Average effective age of labor market exit in 2020<\/p>\n\n\n\n

Source: Organization for Economic Cooperation and Development<\/p>\n\n\n\n

Emmanuel Macron\u2019s government will present his plan to overhaul France\u2019s pension system on Tuesday, likely triggering mass strikes and protests that may further undermine an economy already at risk of falling into recession, as Bloomberg\u2019s William Horobin<\/a> and  Ania Nussbaum<\/a> report here<\/a>.<\/p>\n\n\n\n

Even moderate labor unions have vowed to down tools and take to the streets if the French president goes ahead with his election pledge of raising the minimum retirement age from 62. <\/p>\n\n\n\n

Yet the government insists such change is essential to boost relatively low employment rates among seniors and avoid persistent deficits in a system funded by worker contributions. <\/p>\n\n\n\n

Today\u2019s Must Reads<\/h2>\n\n\n\n