To restore rapid GDP expansion, Chinese policymakers must break the cycle of pessimism and recover lost household and corporate confidence.
Shoppers at a newly reopened mall in Beijing, December 4, 2022. Credit: Imaginechina via AP Images
China’s recent decision to abandon its strict zero-COVID policy has led many to believe that its economy will bounce back. The Economist Intelligence Unit, for example, has revised its forecast for Chinese GDP growth in 2023 upward, to 5.2%. But growth recovery is not automatic, and China must contend with several challenges, including declining confidence among firms and households about their future incomes in the short run, insufficient productivity growth in the medium run, and a
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