The View From China

Both domestic and external forces may limit China's growth prospects.

It had been four years since I visited Beijing. The spring weather and the spring flowers made the city sparkle. The air was clear, in more ways than one.

The time spent last week in China and Hong Kong was impactful. My partners and clients are enjoying a renaissance after two and half years of COVID caution, which was followed by two and a half months of extreme contagion. Both were harrowing and will not soon be forgotten. But the relative freedom now afforded to those living in the two places has lifted spirits and economic activity.

I didn’t want to spoil the mood, but the experience of other countries suggests that the initial months of post-pandemic exuberance will give way to a slower and more sustainable pace of spending and production. COVID-19 will almost certainly have the same kind of lasting impact on China’s society and its economy that other countries are experiencing. And the competitive and geopolitical landscape is much more complicated than it was in 2019, creating stronger headwinds to China’s progress.

China was first into the pandemic and the last one out. The outbreak prompted an aggressive response: lockdowns, contact tracing, and forced quarantine for the sick were applied everywhere the virus appeared. China was slower than other countries to initiate vaccination, and when they did, their vaccines proved to be less effective.

China's GDP Growth