If the right policies are put in place, China will avoid a Japan-style stagnation.
China's GDP barely grew in the second quarter. The restrictions are no longer in place. The country is waiting for a meeting of policymakers expected at the end of the month.
China has undiscovered growth potential for the next few years even if Covid restrictions are loosened.
The country has a lot of room to grow.
According to World Bank data, China's per capita GDP was less than a fifth of that in the United States.
China is expected to maintain 4% to 5% growth in the next five to 10 years, according to Larry Hu. There are uncertainties that could affect his estimates.
Dan Wang, chief economist at Hang Seng Bank China, said that China has a plan to unify business standards. Income can be increased by a lot once those barriers are lifted.
Current practice favors a company from a local city over one from another province, she said. She pointed out that this year there was a stark example of regional biases when different Covid rules in different provinces caused inefficiency.
Increased investment in manufacturing in China could support growth in the future, according to Wang.
The impact of Covid and the Russia-Ukraine conflict have been emphasized in the country's economic narrative.
Zong Liang, the Bank of China's chief researcher, dismissed the idea that China would face economic stagnation like Japan. He said that China has kept control of its currency while Japan has lost it.
China has self-reliance in tech innovation, according to Zong. Stimulus announced in May is expected to take effect in the third or fourth quarter and benefit from increased trade under new free trade agreements.
China and Japan face the same challenges in the housing market.
Beijing has tried to control speculation in the market. According to a CNBC translation, Zong said that the older population is a problem that deserves our attention.
Some are less hopeful. Michael Pettis, a finance professor at Peking University, said that China has an even more extreme version of the Japanese imbalances.
The burst of a bubble in stocks and real estate has slowed the growth of the Japanese economy. Japan grew rapidly in the 1970s and 1980s thanks to high growth in exports and infrastructure investment, but by the early 1990s it was spending more on wasteful projects.
Japan has not been able to use its consumers to drive growth because the manufacturing sector has not accepted higher wages.
If China can make changes to its political institutions, it won't necessarily follow Japan's path.
He said that China is more likely to face a long, Japan-style period of low growth than a financial crisis.
China's GDP would grow by no more than 2% or 3% annually in coming years if non productive investment is reduced and not replaced with an equivalent source of growth.
Investment banks have slashed their China GDP forecasts due to the country's zero- Covid policy.
The deputy director of the Economics Policy Commission at the China Association of Policy Science said that economists couldn't solve the problem. According to a CNBC translation, he said that.
Bernstein thinks that shares can rally more than 20% from here.
It was noted that monetary policy and fiscal policy may not contribute much, and that increasing their scale would only make the problem worse.
Many home buyers in China are refusing to pay their mortgage until developers are able to finish building apartments.
China might have to turn to its government for help.
The author of the book "China's Guaranteed Bubble" warned in his book of the risks of excessive government support.
The situation in Japan may necessitate some more planning economy approach according to the professor of finance.
He said that just like Japan built up its social safety net during a bubble period, China should do the same.
Chinese consumers could be encouraged to spend if they were reassured of those costs.
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