China is grappling with domestic economic challenges at the same time
that external risks from U.S. trade threats are rising.
In response, Chinese policymakers have announced a raft of stimulus measures, which they doubled down on just last week.
But will the stimulus be enough?
In the short term, we're probably going to see an expansion of fiscal support, much greater than we've seen already.
Probably in the first quarter, we will finally start to see real attempts to stimulate the demand side of the economy.
And that will be very positive in the short term.
But ultimately, it's only a short term solution.
I'm Allison Nathan, and this is Goldman Sachs Exchanges.
Each month, I speak with investors, policymakers,
and academics about the most pressing market moving issues for our top-of-my-report from Goldman Sachs Research.
This month, I spoke with China watchers Wei Shan, chief China economist at Goldman Sachs,
and Michael Pettis, professor at Peking University's Guan Ha School of Management.
We discussed China's economic challenges and just how effective the policy stimulus could be in addressing them.
I started off by asking my colleague Wei to level-set on how China's growth has evolved in recent years.
There were quite a few surprises in the Chinese economy over the past couple of years.
If you think back the early 2023 reopening,
if China had followed any other economies experience, there should be a very strong rebound.
But 2023 growth was only 5.2% after 3% in 2022.
So that was a disappointment given reopening boosted services activity.