Analysis
BEIJING – Expectations are high for China’s economic performance this year amid the country’s move to adapt its COVID response in light of the evolving situation and better coordinate epidemic prevention and control with economic and social development.
China’s downgrading management of COVID-19 from Class A to Class B takes effect yesterday after the country made several adjustments to its anti-virus policies in 2022.
As China copes with the changing situation of the epidemic and minimizes its disruptions in the economy and society, analysts are upbeat about China’s economic prospects in 2023, highlighting major growth impetus for the expected rapid growth.
OPTIMISM FOR STRONG EXPANSION
China is getting back to its pre-epidemic hustle and bustle, with production lines humming and machines running, restaurants and shopping malls filled with people, and travel rushes on the road and at subway stations the norm again.
More than 50 million people traveled in China during the New Year holiday. On January 1, 10,640 cinemas opened for business nationwide, a new high in nearly 10 months.
As China’s 40-day-long Spring Festival (Chinese New Year) travel rush kicked off on Saturday, people are swarming train stations, airports, and coach terminals across the country for family reunions.
The number of passenger trips during this period is expected to surge 99.5 percent year on year to nearly 2.1 billion, resuming 70.3 percent of that in the same period in 2019, data from the Ministry of Transport shows.
With optimized anti-virus response, the restoration of China’s economic and social order is expected to speed up. It will release enormous vitality, facilitate economic circulation, and accelerate growth, said the Office of the Central Financial and Economic Affairs Commission of the Communist Party of China (CPC) Central Committee.
The Chinese economy is predicted to pick up in 2023, despite a possible sharp decline of world economic growth, the office noted, highlighting robust recovery in the first half, especially the second quarter.
Global observers also speak highly of China’s prospects. In a recent report on the global economic outlook, Goldman Sachs predicted China’s gross domestic product (GDP) growth to rise from 3 percent in 2022 to 4.5 percent in 2023.
According to J.P. Morgan Asset Management’s forecast, China’s GDP growth may rebound to over 5 percent this year, while Morgan Stanley’s outlook on growth has risen to 5.4 percent.
China will get rid of COVID-19 disruptions, its real estate market will gradually stabilize, and these will boost its economic recovery, said Robin Xing, chief China economist with Morgan Stanley.
“We expect China’s economic growth in 2023 to be much higher than the previous year, mainly driven by consumption,” Xing noted, forecasting the growth of consumption at around 8 percent and expressing specific optimism for service-related consumption in the country.
Echoing Xing’s expectations, Yang Delong, chief economist with First Seafront Fund, said pent-up consumer demand in the past three years would revive, and economic growth would accelerate quarter by quarter.
Among observers that are bullish on China’s real estate market, Deng Haiqing, chief investment officer of AVIC Fund Management Co., Ltd., said demand for home ownership, improved housing conditions, and elderly-care housing would significantly boost real estate consumption.
“China’s high-quality development will significantly enhance the competitiveness of the economy, especially its industrial clusters, in the global supply chain,” Deng added, emphasizing sound performance of sectors related to high technology and green consumption.
READY TO WORK HARD
Faced with the arduous task of domestic reform and development as well as a turbulent external environment, hard work is necessary to promote the overall improvement of the economy, according to the Office of the Central Financial and Economic Affairs Commission of the CPC Central Committee.
With firm confidence and policy know-how, China has mapped out plans to inject more vitality into the market while addressing the weak links to promote sound growth in 2023.
In terms of macro policies, China will expand fiscal policies, including coordinating the fiscal revenue, deficit, and interest subsidies, appropriately increasing fiscal spending and channeling fiscal funds to primary-level governments and tilting support toward challenging and underdeveloped regions, Minister of Finance Liu Kun told Xinhua in an interview.
The Office of the Central Financial and Economic Affairs Commission of the CPC Central Committee said China’s monetary policy will be precise and powerful in 2023. Measures will be taken to maintain reasonably sufficient liquidity and implement precise investment, offering special support to micro and small businesses, technological innovation and green development.
To stabilize industrial growth with a focus on key industries and areas, China will introduce targeted policies to boost the stable development of pillar industries, such as automobiles and electronics. It will also cultivate fresh growth points in new energy, new materials, and other emerging industries, Minister of Industry and Information Technology Jin Zhuanglong told Xinhua.
More resources will be tilted for manufacturing enterprises to help them attain high-end, smart and green development. Services for major foreign-invested manufacturing projects will improve, and a modern industrial system will be built with weak links in key and core technologies tackled, Jin said.
To promote steady growth in consumption, policies will be introduced to increase the income of urban and rural residents through multiple channels, especially that of low-and middle-income residents, said Zhao Chenxin, deputy director of the National Development and Reform Commission.
China will promote sustained recovery in key areas and bulk commodities and strengthen support for consumption related to housing improvement, new energy vehicles, and elderly care while expanding consumption scenarios with the help of new technologies and applications, Zhao said.
In the real estate sector, work will be done to meet people’s basic housing demand and the need for improved housing conditions, said Ni Hong, minister of housing and urban-rural development.
Ni said favorable policies such as lower down-payment ratios and mortgage rates would benefit key groups, including first-time homebuyers and families with more than one child, while city-specific housing policies and a targeted approach will be adopted to boost market confidence.
“We have the confidence, conditions and ability to promote the overall growth of China’s economy in 2023, realizing effective improvement in quality and reasonable expansion in quantity,” Zhao said. – Xinhua
Passengers queue up to go through entry procedures at Shanghai Pudong International Airport yesterday. – Xinhua
