Goldman Sachs Global Economics Analyst Exhibit 18: China Will Need to Ramp Up Vaccinations Before Reopening Can Safely Begin Percent Indicators of Covid Health Risk Beds per 100k Millions Daily Covid-19 Vaccinations Administered in China Millions of population Unvaccinated Elderly* (left) people (7-Day Moving Average) per day 35 40 25 25 ICU Beds (right) 30 35 30 20 20 25 25 20 15 15 20 15 15 10 10 10 10 5 5 5 5 0 0 China HK Japan US China Germany US 0 0 *Mainland China (3 doses of Chinese vaccine), Hong Kong (2 doses of mRNA vaccine or Jan-2021 Jun-2021 Nov-2021 Apr-2022 Sep-2022 3 doses of Chinese vaccine), Japan, Spain, and the US (2 doses of mRNA vaccine). Source: NHC, Wind, Government of Hong Kong, Goldman Sachs Global Investment Research Despite our April reopening baseline, we forecast Q2 growth of just 2% annualized on our assumption that reopening initially triggers an increase in infections that keeps caution high. Weak growth in East Asian economies such as South Korea, Taiwan, and Hong Kong during the first quarter of exiting ZCP also supports our soft Q2 forecast. In contrast, we look for a meaningful reopening growth boost in H2, which will likely extend into 2024. As ZCP is currently still subtracting about 4-5% from the level of GDP, we see substantial room for a cyclical rebound as immunity levels rise and most households learn to live with the virus. Although clearly above consensus, our Q3 and Q4 forecasts of 10% and 6% annualized are not spectacular relative to other international reopening experiences. This is because we expect a continued drag from Covid caution as well as other headwinds, some cyclical and some more structural. On the cyclical side, fiscal policy is set to tighten if the domestic economy rebounds, and Chinas pandemic-related export boom should fade as global demand for tech, housing, and Covid-related products slows further. On the structural side, we see the contraction of the property sector and US chip export restrictions as multi-year drags. We estimate that the ongoing slide of the property sector will subtract around -1½pp from growth next year as it continues to delever and face demographic headwinds (Exhibit 19). 16 November 2022 16