BOFIT Forecast for China 2021–2023 / 1

Abstract

In the second half of 2020, China witnessed a rapid recovery from the covid-19 outbreak. Growth was supported by robust exports and economic stimulus measures geared to boosting fixed investment. China’s overall growth prospects, however, remain clouded by persisting structural imbalances further undermined by economic stimulus measures during the covid crisis. Due to the low base of 2020, the apparently strong economic growth this year will settle back to lower levels in the years ahead. Despite rapid recovery, the covid crisis has left the economy more vulnerable. Moreover, external uncertainties have increased, particularly with the efforts of the United States to lessen the interdependence of the two countries. China continues to postpone necessary policy reforms that would improve productivity. The latest five-year plan (2021–2025) calls for increased self-sufficiency and even more government intervention in the economy.