China's growth is faltering. Demographics are down, real estate is in serious crisis and exports are hampered by US tariffs and a cooling global economy. Deflationary pressure is becoming a major issue, foreign investment is struggling and stock markets have been languishing for several months, waiting for a new boost.

All those involved in the economic landscape are hoping that Beijing will bring out the money printing press to pull the country out of the doldrums, as its leaders tried to do a few years ago at the start of the real estate collapse. They are likely to be disappointed.

Xi Jinping has already resisted the initial lamentations of his generals and the markets to stimulate recovery, and is likely to focus his efforts on industrial reinvigoration, scientific and technical research, and geopolitical objectives. According to specialists, there is little to be expected in the way of stock market, infrastructure, export or real estate revitalization. In addition, the NPC has little power of conviction or action, and plays the public role of approving major policy decisions.

However, there is some good news for the country's leaders. The country's growth should rebound this year - Beijing is aiming for an ambitious 5%, albeit at its lowest level for many years - thanks to an aggressive fiscal policy and a gentle recovery in consumption and inflation (expected to be around 3%). The import-export figures published this morning have eased tensions considerably, confirming the return of international demand. Finally, Xi Jinping may also decide to increase the budget deficit at any time, to come to the rescue of the most ailing sectors.

 

Drawing by Amandine Victor