Morgan Stanley says China’s recovery will be driven by consumer ‘revenge’ spending rather than the steel-hungry property sector. That’s a worry for iron ore prices.
has clearly added momentum to the market’s big bet on China’s recovery, but Garner sees the Communist Party Congress last October as the real moment things changed in China.
But it is consumers who will lead the recovery. Morgan Stanley estimates they have amassed savings of between $640 billion and $850 billion during the pandemic years, equivalent to 7 per cent - 9 per cent of consumption. As part of this is deployed, and real incomes bounce back, the bank expects real consumption growth could hit 9 per cent in 2023, up from zero in 2022.
This is predicated on Chinese steel demand staying flat at 1 billion tonnes per annum, and the property sector concentrating on completing the raft of unfinished apartment buildings around the country rather than building new ones.
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