Abstract: In Q3 China's economy continued its recovery, with major macroeconomic indicators showing further improvement compared to Q2. Private sector investment and consumer activities are gradually returning to normal. However, there still seems to be some gap between China’s economic performance and the potential output level. The economic recovery process has exhibited uneven characteristics, reflecting a "zigzagging progress".
Economic performance is inherently tied to the behaviors of economic entities and their mutual influences, with these behaviors significantly influenced by the state of their balance sheets. This report conducts a comprehensive analysis of the overall progress in repairing sectoral balance sheets during the second quarter. Leveraging Q3 balance sheet data, the focus is placed on scrutinizing advancements in balance sheet restoration across sectors, identifying key challenges, and proposing relevant macroeconomic policy implications.
