When one door opens

Question: What opportunities and challenges does China face?

Silvia Dall'Angelo: Following the announcement by Xi Jinping in late 2022, China reopened its economy in a full and immediate fashion. This means that China's growth is likely to rebound quite sharply in 2023. Of course, the low growth base in 2022 of only 3% is also helping to provide a bit of a lift in 2023. On top of that, of course, we have the reopening dynamics and the fact that Chinese policymakers will provide some monetary and fiscal stimulus. We're now looking at growth of between 5.5% and 6% in 2023, which is still below growth rates that prevailed before the COVID crisis. And, indeed, China is facing the challenge of transitioning from an emerging market growth model to a more advanced growth model. Indeed, we are looking at a consumption driven recovery rather than an investment led recovery and that's also an issue, I would say, from the perspective of the impact on global growth and global inflation in 2023. I think that China's reopening will of course lift somewhat global growth, but it'll be a limited and temporary impact. We've again, limited global spillovers. They are limited in size, but also in terms of geographical impact. Europe is probably better positioned to benefit from this Chinese reopening, but apart from that, the impact for global manufacturing activity, and also commodity prices, should be limited.