Robust rebound likely in 2023

Experts： Economy may exceed 5％ growth this year as consumer activity recovers

China’s economy is likely to see a robust rebound this year as better－than－expected growth results for 2022 have demonstrated its resilience in coping with multiple challenges， officials and experts said on Tuesday．

The nation’s economic growth is expected to rebound to above 5 percent this year as consumer activity revives amid waning COVID disruptions while concerted policy steps are set to prop up infrastructure investment and stabilize the property sector， they said．

Beating market expectations and outrunning many major economies such as Germany， China’s GDP expanded 3 percent year－on－year in 2022 to 121．02 trillion yuan （＄17．94 trillion）， the National Bureau of Statistics said on Tuesday．

Fourth－quarter GDP growth came in at 2．9 percent， which experts partly attributed to the nation passing the recent COVID－19 peak faster than expected．

Kang Yi， head of the NBS， said economic performance remained overall stable last year despite the challenges of intensified geopolitical tensions， rising global downside risks and repeated COVID－19 outbreaks， pointing to the strong resilience and great potential of China’s economy．

”Looking into 2023， China’s economy is bound to see an overall improvement，” Kang said， adding that economic activity is gradually normalizing as the country enters a new phase of COVID response， with domestic flights having recovered to more than 80 percent of the level seen in 2019．

As the peak of recent COVID－19 infections appears to be over， experts said the Chinese economy is poised to rebound soon， with the majority of provincial－level regions having set their growth targets for this year at between 5 and 6．5 percent．

Kang Yong， chief economist at KPMG China， said he expects the nation’s economic growth to accelerate to about 5．2 percent this year as the increase in household savings over recent years may partially translate into a rebound in consumer spending upon the resumption of offline consumption．

Consumption growth has shown signs of stabilization as the year－on－year decline in retail sales shrank to 1．8 percent in December from 5．9 percent in November， NBS data showed．

At the national level， Kang said it is sensible to set this year’s GDP growth target at above 5 percent year－on－year， which will be not only attainable but necessary for the country to reach the goal of achieving the per capita GDP of a midlevel developed country by 2035．

To achieve that target， the country’s per capita GDP， which was 85，698 yuan last year， would have to more than double．

More efforts are therefore still needed to consolidate the foundation of China’s economic growth， NBS head Kang said， given the stagflation risk facing the world economy and the lingering pressures facing the domestic job market and the operation of enterprises．

The official added that China’s price stability has created favorable conditions to leverage macroeconomic policy tools to stabilize growth．

Louise Loo， senior economist at British think tank Oxford Economics， said she expects to see continued policy accommodation this year， with off－budget fiscal policy， including local government special bonds， likely to be the primary policy lever．

Apart from stepped－up macroeconomic policy adjustments， experts said more measures to stabilize the real estate sector and relax new energy vehicle purchase restrictions could be taken at the local levels．

Liu Linan， managing director and head of Greater China macro strategy at Deutsche Bank， said there is still room for further adjusting mortgage loan rates and first－time homebuyers’ down payments．

”If further progress is made in terms of consolidation of China’s real estate sector， property developers’ debt restructuring and bank loans for acquisitions of quality property projects， it will be conducive to boosting recovery of the sector and restoring market confidence，” Liu said．

NBS data showed that real estate development investment dropped 10 percent year－on－year last year， widening from a 9．8 percent decline in the first 11 months of the year and remaining a key drag on growth．

The bureau also said that the country’s population has declined by 850，000 people year－on－year to 1．41175 billion in 2022．

To deal with the impact of a decline in working－age population， it is important for China to improve the quality of the labor force through education and on－job training， said Lin Jianhai， former secretary of the International Monetary Fund．