China: Economic Fundamental Recovery Is Premature

[Asia Economy Reporter Park Jihwan] An analysis has emerged that it is premature to discuss fundamental improvements in the Chinese economy based solely on the trade agreement reached between the United States and China in December last year.

Shim Jeonghoon, a researcher at KTB Investment & Securities, stated on the 12th, "With the Phase 1 trade agreement reached between China and the U.S. last December, there has been an increase in optimistic views toward the Chinese economy," but he assessed, "However, it is insufficient to expect fundamental improvements based solely on the trade agreement." He also analyzed that policy responses are shifting focus from short-term growth to mid- to long-term structural reforms, and the trend of economic slowdown is expected to continue.

Researcher Shim Jeonghoon said, "Recent major Chinese indicators reflect the possibility of passing the economic bottom," and added, "Exports are recovering, led by U.S. exports which had driven the slump,

while domestic demand factors such as manufacturing slowdown, easing of automobile sales decline, and reduced inventory burdens lower the possibility of further contraction."

However, he explained, "Considering that the strength of economic stimulus through policies is weakening, and the recovery of demand in advanced countries is not easy, as well as the fact that domestic demand continues to face corporate profit slowdown and stagnation in household purchasing power, expectations for the rebound magnitude need to be lowered."

It is expected that the growth engine of the Chinese economy will undergo changes in the future. The analysis suggests a shift from quantitative growth relying on existing real estate investment and infrastructure investment to new economic industries based on advanced technology and consumption upgrades, which signify changes in consumption structure.

This content was produced with the assistance of AI translation services.