The city of Taiyuan in central China saw GDP grow 10.9% year-on-year in the first three quarters of 2022. Pictured is a screen showing details of a new factory in city.
Vcg | Chinese Visual Team | beautiful pictures
BEIJING — China’s economy in 2023 will almost certainly not look like China’s in 2019.
Real estate has fallen under Beijing’s repression. Export has decrease after a spike. Chinese e-commerce giant JD.com This year replace Huawei, affected by US restrictions, because largest non-state enterprise in China by revenue.
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In the last month, Beijing suddenly stopped working Many blockade measures and Covid testing requirements have affected economic growth over the past 18 months. Analysts warn of a bumpy road to a full reopening, but now they expect China’s economy to recover sooner than previously forecast.
The factors underpinning that growth will almost certainly be different than they were three years ago, according to economists.
Analysts at leading China investment bank CICC said China’s growth model is shifting from one heavily reliant on real estate and infrastructure to one in which the so-called economy Green and digital economies play a larger role. They invoke the judgment The 20th National Congress of the Communist Party of China emphasis on innovation.
The digital economy category includes communication equipment, information transmission and software. A green economy refers to industries that need investment to reduce carbon emissions – electric power, steel and chemicals, among others.
According to CICC estimates, over the next five years, cumulative investment in the digital economy is expected to increase more than sevenfold, reaching 77.9 trillion yuan ($11.13 trillion).
This, the report says, surpasses anticipated cumulative investment in real estate, traditional infrastructure or the green economy — making digital the largest sector in the four categories.
The report said that in 2021 and 2022, real estate is the largest investment category. But CICC analysts say that this year, Investment in real estate decreased up about 22% year-on-year, while digital and green entry increased around 24% and 14% respectively.
Beijing cracked down on developers’ overreliance on debt in 2020, contributing to defaults and a slump in housing sales and investment. Authorities this year have relaxed many financial restrictions.
export fade
While much of the world struggled to contain Covid-19 in 2020 and 2021, China’s rapid containment of the virus helped local factories meet growing global demand for products. medical and electronic products.
Now, demand is falling. According to Wind Information, China’s exports began to decline year-on-year in October — the first time since May 2020.
The decline in net exports is expected to slow growth by 0.5 percentage points for the year, Goldman Sachs chief China economist Hui Shan and research team said in a December 16 report. next. Net exports have supported China’s GDP growth over the past few years, contributing as much as 1.7 percentage points in 2021, analysts say.
But China’s exports to the Association of Southeast Asian Nations have increased, surpassing exports to the US and EU on a monthly basis in November. according to customs data.
“Exports to ASEAN countries could act as a mild buffer against pressures in the EU and US markets,” China economist Xiaowen Jin of Citi and research team said in a note on Thursday. Private. They expect ASEAN GDP growth to recover in 2023, while the US and EU spend part of next year in recession.
Jin pointed out that China’s auto exports, especially electric cars and related parts, have helped support overall exports this year.
Beijing has made efforts to promote the development of the national electric car industry. Many brands from Nio arrive BYD has started selling passenger cars to Europe and other countries.
Consumers come back?
“The rapid deceleration in exports also means that China needs to tap the domestic market for growth in the near future,” Hao Zhou, chief economist at Guotai Junan Securities, said in a report on Thursday. twelfth. “With the easing of Covid restrictions, consumption is likely to see a sustained and meaningful recovery from next year.”
He expects retail sales to grow 6.8% next year and national GDP to grow 4.8%.
The central government’s policy announcements this month have prioritized boosting domestic consumption. Retail sales have lagged general growth since the pandemic, while record proportion of people prefer to save.
Goldman Sachs analysts raised their GDP forecast for 2023 from 4.5% to 5.2% as the economy reopened earlier than expected, with consumption the main driver.
However, they warn that incomes and consumer confidence will need time to recover, meaning any release of “pent-up demand” next year could be limited externally. some categories such as international travel.
Rich people spend more, poor people spend less
Spending by poorer Chinese is not keeping up with the money that wealthy Chinese are spending — a contrast to the more even pre-pandemic grouping, according to a survey by McKinsey this year.
That trend has already shown in the companies’ financial results.
For the quarter ending September 30, focus on budgeting Pinduoduo said revenue from merchandise sales fell 31 percent from a year ago to 56.4 million yuan.
alibabaChina’s commerce revenue, which includes apparel sales, fell 1% year-on-year to 135.43 billion yuan during that period.
Sales of more expensive items favored by the middle class, including electronics and home appliances, rose at JD.com, which said sales from these products rose about 6% to 197.03 billion yuan for the three months ended September 30.
Over the long term, McKinsey expects millions of urban households to become wealthier, while the number of lower-income households will decline.
