China's recovery helps the global economy avoid recession

According to the report on the website of the Spanish "Economist" on February 4, various kinds of demand from China have driven up the price of industrial metals and helped the global economy to stay away from recession.

According to the report, the world's major central banks recognize that the recovery of China's economic activities is boosting the global economy. The International Monetary Fund also recently raised its forecast for global overall growth in 2023 to 2.9%, which is mainly due to the recovery of China's industry.

Due to the increase in demand (from China), the price of industrial metals has increased by 8% in just two months.

Since 2023, the prices of copper, aluminum and other metals have risen by about 10% on the London Metal Exchange. Against the background of global concern about the contraction of GDP, China has adjusted its epidemic prevention and control policy, which is conducive to the normal development of its own economy, and also helps economies such as Germany - and also the whole of Europe - to delay falling into a technical recession, and even eliminated this possibility in the first half of this year.

At present, as China celebrates the Lunar New Year, the service industry and tourism industry have also been boosted. Domestic and foreign demand in China has made commodity investors see the possibility of global market recovery. The purchasing managers' index (PMI) of manufacturing industry in Europe and the United States in December last year and January this year reflected the rebound in demand for further increase in production.

However, the increase in economic activity mentioned above is still irregular. Lu Ting, chief economist of Nomura Securities in China, said that the improvement of consumption in China's service industry was optimistic, but the sales of excavators and other (construction and mining related) heavy machinery fell by 40% in 2022. According to experts' estimates, it is still unable to recover to the original level in the first half of this year.

According to the report on the website of Hong Kong's "The Letter" on February 3, Goldman Sachs published a report that China reopened earlier than expected, and economic growth is bound to accelerate, which will mildly boost global economic growth.

Jan Hachus, the chief economist of Goldman Sachs, said in the report that China's domestic demand increased by about 5%, which is expected to drive the export performance of other economies, but the economies outside the Asia-Pacific region benefited less. If China's domestic demand fully recovers, it should increase the global GDP by about 1 percentage point this year.

Goldman Sachs believes that the recovery of foreign service demand, especially the resumption of international travel, will also moderately promote global economic growth.