Workers produce solar panels for export at a factory in Lianyungang, Jiangsu province on Jan 3, 2023. (SI WEI / FOR CHINA DAILY)
WASHINGTON – China's economy is expected to recover faster thanks to good fundamentals, effective macro-policy response, and optimized pandemic prevention and control policies, which will boost global growth expectations, observers said.
The International Monetary Fund on Monday projected China's economy will grow by 5.2 percent in 2023, 0.8 percentage point higher than October 2022 forecast.
"Growth in China is projected to rise to 5.2 percent in 2023, reflecting rapidly improving mobility," the IMF said in the newly released update to its World Economic Outlook report, adding that "growth is expected to pick up in China with the full reopening in 2023."
Following a new round of policy shifts concerning COVID-19 prevention and control, a rebound in travel and consumption in January illustrates the resilience of the Chinese economy and supports forecasts of a further recovery.
During the three-day New Year holiday, the country recorded roughly 52.7 million domestic tourist visits, up 0.44 percent year-on-year. Tourism revenue generated over the holiday reached over 26.5 billion yuan ($3.9 billion), up 4 percent from the same period last year.
The following weeklong Spring Festival holiday has been even more encouraging. Official statistics showed about 308 million domestic trips were made in China during the holiday, up 23.1 percent year-on-year. The holiday box office sold more than 187.6 million tickets as of noon (1600 GMT) Friday, generating a whopping revenue of 6.76 billion yuan (about $988 million).
We see both production and consumption activities on track to recover further. It is likely that the economic recovery could be front-loaded compared to our baseline forecast.
Zhu Haibin, chief China economist at J.P. Morgan
Zhu Haibin, chief China economist at J.P. Morgan, is also optimistic. "We see both production and consumption activities on track to recover further. It is likely that the economic recovery could be front-loaded compared to our baseline forecast," wrote Zhu.
Noting that hundreds of US companies across multiple industries are eager to expand their businesses in the Chinese market, Craig Allen, president of the US-China Business Council, expects the Chinese economy to register a higher growth rate in the first half of this year than the latter half of last year, as a result of so much domestic demand during the Spring Festival holiday season.
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Such numbers and the assurance that China will pursue economic stability and expand domestic demand have given foreign investors and observers much confidence in the Chinese economy.
Besides the IMF, multiple international investment banks and financial institutions, including Morgan Stanley and Goldman Sachs, have upwardly revised their forecast for China's economic growth in 2023.
In a research note released in January, Morgan Stanley raised its outlook for China's GDP growth in 2023 from 5.4 percent to 5.7 percent, predicting that a rebound in activity will come earlier and be sharper than expected.
The rapid rebound in mobility and the alignment of COVID-19 management, economic and regulatory policy to promote growth are two major reasons for the upward revision of the forecast, said Chetan Ahya, chief Asia economist at Morgan Stanley.
Goldman Sachs has raised its targets for the MSCI China Index twice in January, offering more upside in 2023 for investors to savor when trading resumes after Lunar New Year holiday, South China Morning Post has reported.
"We are very confident in the Chinese economy and the strength of the leadership and the government and the people of China," said Haitham Al Ghais, secretary general of the Organization of Petroleum Exporting Countries.
China is a major actor in global value chains, chairman of the China-Belgium Chamber of Commerce Bernard Dewit said, and therefore has a significant impact on manufacturing, shipping and global logistics.
China will continue to provide important support for global industries and supply chains to return to normal operations, and this is extremely important in order to stabilize the global economy, he noted.
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According to the IMF, the rise in central bank rates to fight inflation and the Russia-Ukraine conflict continue to weigh on economic activity.
Although the update also said the balance of risks remains tilted to the downside, financial institutions and observers expressed confidence in China's role in global growth in the coming year, saying that China has played a meaningful role as a global growth engine.
In 2023, China "can play a very important role in stimulating" global growth, said Hamid Rashid, chief of the Global Economic Monitoring Branch, Economic Analysis and Policy Division, UN Department of Economic and Social Affairs
In 2023, China "can play a very important role in stimulating" global growth, said Hamid Rashid, chief of the Global Economic Monitoring Branch, Economic Analysis and Policy Division, UN Department of Economic and Social Affairs.
In recent decades, China has evolved into a global economic leader in consumption, trade and investment, according to a recent UBS report.
"As a result, the country has played a meaningful role as a global growth engine — not only benefiting Chinese companies and its people, but many other developing and developed markets," it added.
"All fundamentals are in place" in China for continued economic growth over the next 20 years, BHP Group CEO Mike Henry said in late November, adding that "obviously, China is going to provide a bit of stability to global growth over the next year."
With the advantages of first class infrastructure, high quality workers and huge market, China has become "indispensable" in the world, said Khairy Tourk, professor of economics with the Stuart School of Business at the Illinois Institute of Technology in Chicago.
He also praised China's COVID-19 policies for not only saving millions of lives, but also a major factor behind the revival of the Chinese economy.
When advanced countries might suffer from deep recession, "only China is the country that will continue to be a major engine of global growth," the scholar said.