China returns with unsteady gains

<p>Kia ora,</p><p>Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news we return from our long holiday weekend with the rest of the world delivering improved economic performances</p><p>The Chinese Lantern Festival has ended China's New Year celebrations and shows that the feared aggressive surge in infections did not hold back their re-opening. Hospitals and health services are swamped, but the relief drove Spring Festival <a href="https://www.yuantalks.com/chinas-domestic-passenger-flights-up-13-8-on-year-in-jan-23-29/" target="_blank"><strong>travel</strong></a> and spending. However long this momentum will last is still an open question. And it seems likely the benefits will be spread unevenly across the country.</p><p>China's big state-owned banks are being opted into <a href="https://www.bloomberg.com/news/articles/2023-02-06/china-banks-offer-cheap-consumer-loans-as-xi-urges-more-spending?srnd=premium-asia" target="_blank"><strong>offering unsecured credit card loans</strong></a> for as low as 3.6% to try and keep the holiday momentum going. Worryingly for China, such lending is nowhere near where it was before the pandemic originally hit in early 2020. <a href="https://www.caixinglobal.com/2023-02-06/mortgage-rate-cuts-spread-to-chinas-wealthier-regions-101995270.html" target="_blank"><strong>Mortgage rate cuts</strong></a> for new house buying are spreading too. Perhaps unsurprisingly in retrospect, <a href="http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4784452/index.html" target="_blank"><strong>mortgage loan growth</strong></a> in China was almost non-existent in 2022 (+1.5%, item #6). But that is a huge shift.</p><p>The private <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/81ada91707f74fdbadaf3fd6e3c22231" target="_blank"><strong>services PSI survey for China</strong></a> confirmed the official PSI rebo