Cover Story: China’s Consumers Are Flush With Cash, So Why Does the Recovery Have the Wobbles?

Ominous signs that China’s economic recovery may be slowing from an initial surge fueled by pent-up demand among consumers has analysts and bankers alike pondering whether continued loose monetary policy can underpin the revival, as a rise in risk aversion leads people to save more and shy away from borrowing.

China’s gross domestic product (GDP) grew by just 3% in 2022 amid lengthy pandemic-related lockdowns, but accelerated to 4.5% in the first quarter, the fastest pace in a year. The official target for this year is around 5%. But a swathe of negative economic data for April, which included the manufacturing sector unexpectedly contracting and retail sales missing forecasts, indicates the recovery remains lopsided, with production lagging a rebound in consumption.