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China's consumers are flush with cash, so why is its recovery wobbly?

People are focusing on paying debt and saving, not borrowing more

It's not a question of whether there is enough money being pumped into China's economy to fuel its recovery, but instead: Where is that money going and why aren't people availing themselves of more credit?

Ominous signs that China's economic recovery may be slowing from an initial surge fueled by pent-up demand among consumers has analysts and bankers alike pondering whether continued loose monetary policy can underpin the revival, as a rise in risk aversion leads people to save more and shy away from borrowing.

China's gross domestic product grew by just 3% in 2022 amid lengthy pandemic-related lockdowns, but accelerated to 4.5% in the first quarter, the fastest pace in a year. The official target for this year is around 5%. But a swathe of negative economic data for April, which included the manufacturing sector unexpectedly contracting and retail sales missing forecasts, indicates the recovery remains lopsided, with production lagging a rebound in consumption.

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