China Faces ‘Confidence Trap’ as Economic Recovery Falters
- Data and surveys show business confidence yet to fully recover
- Low confidence limits impact of traditional stimulus: Nomura
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China’s economy is at risk of being caught in a confidence trap as the post-Covid recovery loses steam, presenting Beijing with a problem that can’t easily be solved with traditional tools such as interest rate cuts and infrastructure stimulus.
Evidence of low business and consumer confidence was everywhere in this week’s official data, which showed economic activity losing momentum in April. Private firms barely increased investment, while households curbed their spending on goods like appliances.