china's economy growing strongly in post-pandemic era
shopping at the spring festival shopping street. (photo: vcg)
by staff reporters
following a key meeting that set china's economic policy priorities for 2023, xi jinping, general secretary of the communist party of china (cpc) central committee, delivered an important speech at the annual central economic work conference, held in beijing on december 15 and 16，which analyzed china's current economic situation and scheduled next year's economic work.
it was the first meeting of its kind to be held since the 20th cpc national congress in october, which called for the advancement of national rejuvenation on all fronts through a chinese path to modernization.
many investment banks have since become more optimistic about china's prospects. goldman sachs upgraded its 2023 growth estimate to 5.2 percent from 4.5 percent, saying it expected consumption and services to kick in eventually. societe generale revised its 2023 growth estimate to 5.3 percent, while morgan stanley upgraded its forecast to 5.4 percent.
"directing fiscal resources towards social spending and green investment would not only support short-term demand, but also contribute to more inclusive and sustainable growth in the medium term," said elitza mileva, world bank lead economist for china.
"the biggest change this year seems to be the increased focus on improving the business environment for foreign and private companies, especially the internet platform companies," said adam wolfe, an economist at absolute strategy research. "that could help restore confidence and boost investment in light manufacturing and the service sector," said wolfe.
economists commented that the lift of pandemic restrictions in china will eventually usher in a strong economic rebound, as the country learns to live with the covid-19 virus.
andy rothman, investment strategist of matthews asia, said he is bullish about china's economy. xi's announcement at the annual central economic work conference should lead to a gradual, steady recovery in new home sales in the second half of 2023.
these developments over the last few weeks leave him feeling very optimistic about prospects for the chinese economy, especially after the end of the winter flu season, when covid-19 cases are likely to subside.
as we continue to track milestones in china's economy, rothman said there are three things investors should keep in mind:
first, china is likely to remain the only major economy engaged in serious easing of fiscal and monetary policy, while much of the world is tightening.
second, chinese households have been in savings mode since the start of the pandemic, with family bank balances up 42 percent from the beginning of 2020. the net increase in household bank accounts during this period is equal to 4.8 trillion usd, which is larger than the gdp of the uk.
third, those funds should fuel a consumer rebound in china and a recovery in mainland equities, where domestic investors hold about 95 percent of the market.