China faces mild recovery after pandemic AFTER A STRONG 1st QUARTER IN WHICH CHINA RECORDED A STRONG REBOUND AFTER COVID RESTRICTIONS EASED, ECONOMIC RECOVERY ENTERS A SLOWER 2ND STAGE GDP rebounds in 2023 to 5.5% before slowing down by 9 tenths in 2024 2023 marked by the containment of commodity and food prices and a fall in production prices Weakness in PMIs, mainly in manufacturing Some of the main risks to growth SLOWDOWN IN INVESTMENT AND EXPORTS, WORSENING DEMOGRAPHICS AND LABOR PRODUCTIVITY, AND LARGER FINANCIAL IMBALANCES Lower investment growth compared to the high levels of recent decades Decline in working age population and labour productivity growth Slowdown in export growth High level of non-financial corporate debt (161% of GDP in 2022)

1. 2
4
6
8
10
12
14
-1
0
1
2
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023*
2024*
2025*
Working age population (% y-o-y change)
Productivity growth (right axis)
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Government Corporates Households
1.8
2.6 2.9
4.3
5.0
2.7 2.3
0.1 0.0
1.1 0.8
1.8
1.1
2.2
2.7
1.8
1.3 1.4
2.4 2.2
-1.7
-4
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-1
0
1
2
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8
9
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13
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
Q2
20
Q3
20
Q4
20
Q1
21
Q2
21
Q3
21
Q4
21
Q1
22
Q2
22
Q3
22
Q4
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Q1
23
2023*
2024*
2025*
CPI PPI
5.5
2
4
6
8
10
12
14
16
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023*
2025*
Average 10-19
7.7%
Average 20-25*
4.8%
Average 00-09 10.1%
China's economic situation and forecasts
ECONOMY
In data
China faces mild recovery after pandemic
AFTER A STRONG 1st QUARTER IN WHICH CHINA RECORDED A STRONG REBOUND AFTER COVID RESTRICTIONS EASED, ECONOMIC RECOVERY
ENTERS A SLOWER 2ND STAGE
Source: Círculo de Empresarios a partir de Oxford
Economics, 2023.
ANNUAL CPI 2023*
1.4%
6 tenths less than in 2022
-0.1%
WORKING-AGE
POPULATION 2020-25*
y-o-y, vs. +1.3% in
2000-09 decade
GDP GROWTH
2023*
5.5%
y-o-y, 2.2 pp less than
average 2010-19
EXPORT GROWTH
2020-25*
4.7%
y-o-y,
2.4 lower than 2010-19 decade
* Forecasts
GDP rebounds in 2023* to 5.5% before slowing down
by 9 tenths in 2024*
% y-o-y GDP change
Weakness in PMIs, mainly in manufacturing
Points (> 50 expansion, <50 contraction)
2023* marked by the containment of commodity and food
prices and a fall in production prices
% y-o-y change
In addition, the household savings rate remains higher than the pre-Covid level →
normalization activity not complete
High level of non-financial corporate debt (161% of GDP in 2022)
Composition of non-financial debt as % GDP
Some of the main risks to growth
SLOWDOWN IN INVESTMENT AND EXPORTS, WORSENING DEMOGRAPHICS AND LABOR PRODUCTIVITY, AND LARGER FINANCIAL IMBALANCES
By components …
% y-o-y change
Lower investment growth compared to the high levels of
recent decades
% y-o-y fixed investment change
13.8
7.6
3.1 3.2 3.3
5.9
4.3 4.1
2000-09 2010-19 2020 2021 2022 2023* 2024* 2025*
▼ capital stock → negatively affects
potential GDP
% average annual growth
Decline in working age population and labour productivity
growth
% y-o-y change
% average annual growth
Slowdown in export growth
% y-o-y export growth
Some challenges for exports
o Slower growth of trading partners
o Moving away from low-cost manufacturing - Loss of competitiveness
o Shifting demand from goods to services
o Trade frictions with the US
-10
-5
0
5
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15
20
25
30
35
2000
2001
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2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023*
2024*
2025*
Average 10-19
7.1% Average 20-25*
4.7%
Average 00-09 18.5%
2011-20 2021-30*
Capital stock 10.3 6.1
Potential GDP 7.2 4.5
48,8
56,4
36
41
46
51
56
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Manufacturing Services