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MNI BRIEF: China's Near-Term Path 'Highly Uncertain' - RBA

(MNI) Perth

The Reserve Bank of Australia warned the Chinese economy's near-term path after the lifting of Covid controls was "highly uncertain", according to the Statement on Monetary Policy released Friday.

The RBA noted China could enjoy a rebound in consumption, highlighting policy support to encourage spending and stabilise the property sector.

"Economies have typically seen strong rebounds in household consumption after ceasing restrictions. This could also be true in China if households choose to spend more than expected of the considerable household savings they have accumulated over recent years. In addition, the recovery could be strengthened by a more supportive economic policy stance," the RBA said.

"However, if health outcomes are worse than expected, consumers may be more hesitant to spend. It is also possible that factors such as prolonged weakness in the property sector could weigh on the economy by more or for longer than currently envisaged."

The RBA noted the reopening of China's economy had triggered a "sharp" rebound in iron ore prices and had "improved" the outlook for coal demand.

Robert covers RBA and RBNZ policy and the economy for MNI in Australia.
Robert covers RBA and RBNZ policy and the economy for MNI in Australia.

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