China 2022 Outlook: Pain Thresholds Emerging

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China 2022 Outlook: Pain Thresholds Emerging

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David Richter
DEC 17, 2021

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Executive Summary

Investors are justifiably concerned about China’s ongoing property downturn and growth slowdown. Why hasn’t Beijing introduced more countercyclical support for the economy this year? Is the property sector headed for a hard landing? The property downturn is now the major growth risk for China, and the debate about how Beijing balances the tradeoffs between its longer-term de-risking goals and economic stabilization will be a key driver of the 2022 outlook.

In this analysis we explore the following themes:

  • Beijing’s reluctance to ease, reflecting its policy “regime shift”;
  • How the property sector and growth have yet to bottom;
  • How policy biases have begun to shift given mounting growth headwinds; and
  • Potential pain thresholds that could lead to more decisive support and what this means for growth in 2022.