China still has the capacity for surprise. While growth is far slower than the clip that prevailed during the three-decade-long boom, recent data suggest a recovery of sorts might be in the offing. The health of global commerce hinges on whether this is a blip or heralds a return to a stronger footing.
Unfortunately, there was a rush to evaluate the indicators based on whether President Xi Jinping's target for gross domestic product will be met, missed or surpassed. Beijing's goals hinge on a metric that, at the best of times, has flaws. Underlying conditions matter more and the recent numbers are encouraging.
There are problems with looking at China’s vitality through the GDP lens — the data is widely perceived to be finessed by officials. In a one-party state, the political incentives to achieving objectives set from the top are great, rarely more so than now. Leaders want an increase in GDP of around 5% in 2025 and are likely to, at least, come very close. As nice as that would be in a challenging global economy, it's a long way from a perfect report card. The real estate sector is still troubled, employment is lackluster and deflationary pressures persist.
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