China’s Old Playbook Is Back. That’s Bad News
A nod to projects fueled by debt, at the expense of industrial technology, may not end well.
Building boom.
Photographer: Qilai Shen/BloombergChina’s economy was supposed to be in tatters in the aftermath of Covid Zero. Analysts were betting on a long-term and sustained downshift in growth. Multinational companies were mulling a move away. Now, as the stringent lockdowns pass into distant memory, forecasts are being revised up as industrial activity recovers. It’s worth wondering how Beijing has engineered such a swift turnaround.
Manufacturing and services rose for the first time in four months in January, while the International Monetary fund raised its forecast for the Chinese economy to expand 5.2% in 2023. Goldman Sachs Group Inc. now anticipates China’s gross domestic product to grow by a faster-than-expected 6.5% this year. Construction activity has roared back. That’s a quick reversal from the doom and gloom scenarios just months earlier as the country posted its slowest growth in years.