File photo shows the morning view of the Lujiazui area in Pudong, east China's Shanghai. (PHOTO / XINHUA)
BEIJING — While the global growth outlook is clouded by uncertainty in 2023, economists and experts are upbeat about the prospects for China, expecting stronger policy support and domestic demand to buoy a steady recovery of the world's second largest economy.
Though China's optimized epidemic response may disrupt economic activity in the short term, it is set to shore up growth for the year as a whole, said Han Wenxiu, executive deputy director of the office of the Central Committee for Financial and Economic Affairs.
China's economy will follow a generally upward growth trajectory in 2023, despite potential quarter-to-quarter fluctuations
Han believes the recovery will pick up pace in the first half of this year, especially in the second quarter, when more factories crank up production and businesses reopen.
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Wen Bin, chief economist with China Minsheng Bank, said that warming demand at home will propel the turnaround in the Chinese economy this year, and estimates the country's full-year GDP growth at around 5.5 percent.
China's economy will follow a generally upward growth trajectory in 2023, despite potential quarter-to-quarter fluctuations, said Huang Wentao, an analyst with China Securities. Huang expects the year's growth rate to be at 5.1 percent.
Policies in the pipeline
Experts expect China to renew its policy support for growth, which will work in synergy with the existing policy package and drive a steady economic rebound.
China will strengthen policy coordination across the year, with steps to fully unleash the effects of policies introduced in the second half of 2022, said Zhao Chenxin, deputy director of the National Development and Reform Commission.
The country will step up fiscal policy for better effectiveness and make the prudent monetary policy targeted and effective, possibly bringing its deficit-to-GDP ratio up to 3 percent and special bond issuance up to about 3.8 trillion yuan (about $549.68 billion) in 2023, Wen said.
The government is already on the move. At a national conference held last week, Minister of Finance Liu Kun demanded efforts to leverage the proactive fiscal policy in a more direct and effective manner, fine-tune supportive policies for enterprises and boost confidence of the market.
In light of China's recent policy moves, the markets have many reasons to turn positive, said Lu Ting, chief China economist with securities firm Nomura, in an economic outlook report for 2023.
A strong engine
As China gradually shifts from the traditional investment-led growth mode to one that features both investment and consumption, experts anticipate domestic demand to play a bigger role in driving economic growth.
In particular, economists are pinning their hopes on the revival of consumption this year as the economy regains strength.
Factoring in the income increase, pro-consumption policies and a low base last year, consumption in China is likely to increase 9 percent year on year in 2023, Wen said.
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According to the Chasing International Economic Institute, the per capita consumption expenditure in China is expected to grow 8 to 12 percent from a year ago in 2023, while total retail sales of consumer goods will expand 7 to 11 percent year on year.
China needs to address the issue of insufficient demand at home and prioritize the recovery and expansion of consumption, said Wang Yiming, deputy head of the China Center for International Economic Exchanges.
To that end, the country should work to increase people's incomes, especially for those hit hard by the epidemic, properly relax restrictions on house purchases and mortgage loans, and revive service consumption, Wang said.