Making Asia great again!

WHEN China announced its re-opening in January 2023, a loud rejoicing reverberated throughout the region, propelling most market watchers to upgrade the outlook for regional economies poised to benefit from the positive flow-through from the expected recovery in the Chinese economy.

This optimism appeared to be short-lived as strong market gains seen in February and March of 2023 fizzled out as economic numbers came in lower than market expectations over the following months. By July 2023, other concerns emerged, including high youth unemployment numbers. Unemployment for 16-24 year-olds in urban areas hit 21.3 per cent in June, the highest since 2018 and triple that in the US. This is an area of concern as it points to lower consumption demand from this age group.

With global economic slowdown and elevated inflation, it is understandable that the world is re-focusing on China after it re-opened its economy. While business sentiment has recovered from pandemic lows, spending is coming off. The People’s Bank of China’s Consumer Willingness index (inclination to increase spending on home purchases) fell from the pre-pandemic level of 20.7 as at end-2019 to 16.2 as of end-June 2023.