Can China Revive Economic Growth Post-Congress?

China’s economy has been recovering since its severe summer lockdowns, helped by modest policy support. But a strict zero-COVID policy and housing struggles have crimped economic growth and performance relative to developed markets. China’s policy machinery could kick into a higher gear after the 20th National Congress of the Chinese Communist Party (NCCCP), which convened this week.

Then: Favorable Outlook for China

Early in 2022, many investors expected emerging-market (EM) equities to outperform, aided by a recovery in China. Headwinds from policy interventions to support China’s “Common Prosperity” goals were expected to fade and give way to stimulus, while developed economies would be withdrawing fiscal and monetary policy support.

China was expected to continue its zero-COVID policies, but case numbers generally seemed under control—with fewer lockdowns. Equity valuations were generally attractive, especially in the wake of Common Prosperity actions that impacted broad swaths of the economy—including technology, education and property.