China's economy faces so much new pressure from Covid that Beijing may increase stimulus — boosting overall growth, Citi said Thursday.
"China [is] adapting to minimize the economic costs while implementing the 'dynamic zero-Covid' policy," he said.
In March, China faced its worst wave of Covid-19 since the initial shock of the pandemic in 2020. Major cities like Shanghai and Shenzhen have had to impose lockdowns and quarantines to control outbreaks of the highly transmissible omicron variant. The Caixin manufacturing PMI, a third-party study that covers more smaller businesses than the official survey, also fell into contraction territory in March and its lowest since February 2020, according to data released Friday.One of the actions Yu expects policymakers to take is supporting the struggling, massive real estate industry. Beijing can't afford to wait any longer on efforts to stabilize the property market with measures such as looser credit policies, he said.
Housing sales slumped in the last several months as Beijing clamped down on developers' high reliance on debt for growth. Real estate and related sectors have accounted for at least 25% of China's economy, according to Moody's.
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