China’s Economy Rests on Three Shaky Legs
China’s economy has been taking it from all sides: power outages, the property debt fiasco, snarled shipping lanes and, a bit further back, a brief but damaging Delta variant outbreak. Sharply weaker growth last quarter at 4.9% from a year earlier was expected. And given how modest countercyclical support has been so far, next quarter will almost certainly be worse.
What happens in 2022 remains uncertain but appears to depend primarily on three things: how fast Beijing dials back its squeeze on the property sector, whether consumers finally perk up again, and whether exporters can hang on to recent market-share gains. Power outages remain a drag, but efforts to restart shuttered coal mines and raise power prices will help significantly.
On property, there have been inklings recently of a more permissive stance—some large banks have…