Recent data suggests China’s economy may be struggling rather than roaring back from a seasonal slump, and that its impressive headline growth numbers in 2020 hid an incomplete and unbalanced recovery. Forward-looking purchasing manager indices (PMI) reported by China after the Lunar New Year were just slightly above 50, which shows a growing economy, but possibly at a slowing rate that could be worrying to Chinese officials. It’s too early to tell if the recent dips are temporary, cyclical or symptomatic of a greater slowdown, but dependence on the old model of credit-fueled investment and exports may not be sustainable. If not, then projected supercharged growth of 8-9% in 2021 could be unattainable and inconsistent with the Chinese government’s official narratives.
