China on Brink of ‘Confidence Trap,’ Warn Citigroup Analysts

Chinese leader Xi Jinping speaks at the podium during the meeting between members of the standing committee of the Political Bureau of the 20th CCP Central Committee and Chinese and foreign journalists in Beijing on Oct. 23, 2022. Lintao Zhang/Getty Images

The Chinese economy is on the brink of being caught in a “confidence trap” as its post-pandemic recovery begins to slow.

Low confidence combined with a slowdown makes it difficult for the Chinese Communist Party (CCP) to stimulate the economy using standard methods, such as interest rate cuts and infrastructure spending, warned Citigroup economists.