Deutsche Bank's research report on China's economy projects that the country's trend growth has shifted downward in recent years, with potential growth now estimated to be in the 4.5-5% range. The economy is currently operating below potential, with growth expected to average 4.1% in 2022-23. The government is seen as the key driver of economic growth, with a 2024 growth target of "above 4.5%" expected to be set. A fiscal spending expansion of 1.5-2% of GDP, combined with further PBoC rate cuts, is expected to lift GDP growth to 4.7% and inflation to 0.9% in 2024. The property sector is expected to stop being a drag on growth in 2024, with government-led urban redevelopment and social housing projects expected to stabilize its share in GDP. The renminbi is expected to stabilize in H1 and strengthen in H2 against the USD, as trade flows remain favorable and capital outflow pressures are expected to ease in the scenario of a mild US recession followed by Fed rate cuts.
