China’s gross domestic product growth slowed during the first three quarters of 2024, from 5.3% to 4.7% to 4.6%, raising fears that the country would not achieve its annual growth target of around 5%. But the latest data suggest that China’s economy is finally turning the corner.
Economic activity in China has been relatively weak since the COVID-19 crisis. This was not unexpected, at least not at first: three years of pandemic lockdowns strained household, corporate and local-government balance sheets. Declining business confidence — partly a response to a regulatory crackdown on finance, the property sector and the platform economy — did not help matters.
In early 2021, when the United States emerged from the worst of its pandemic lockdowns, American households quickly began spending the money they had accumulated. Chinese households, by contrast, continued to accumulate savings even after the lockdowns were over: between January 2020 and August 2024, household bank deposits in China swelled by 65.4 trillion Chinese yuan ($9 trillion), with the wealthy accounting for a significant share.
