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Chinese economy likely to rebound in 2023

Chinese economy likely to rebound in 2023

After touching a marked low during this year's current quarter, China's economy is likely to rebound in 2023, Xu Wei, deputy director of the department of macroeconomic research under the State Council's Development Research Center, predicted at Mysteel's annual conference in Shanghai on December 30.

"Under pressure from multiple fronts, China's economic recovery was unstable this year," Xu commented. "And the changes in the COVID prevention and containment measures also brought challenges to economic development," he noted.

According to Xu, since October this year, both population movement and transport of goods throughout China were less active compared with the same period in previous years while at the same time, the domestic supply-demand environment was dull.

In early November, capacity utilization among the more than 20,000 industrial parks in China was around 65%, lower than the normal level of 70-80%, Xu noted. On the demand side, the expansion of the manufacturing industry was modest, while the real estate market failed to receive any strong boost from government incentive policies, he added.

Nevertheless, due to its inherent resilience Xu expects that China's economy will generally rebound next year from the low base in 2022.

"In the past three years, the domestic economy was suffered repeated hits - the pandemic, the tussle between US and China, and disruptions to global supply chains - and yet it still registered annual growth of around 4.5% on average," Xu pointed out. "From the low base of 2022, it is possible that the country's economic growth rate will reach 5% in 2023," he predicted.

"When the impact of the pandemic subsides, people's consumption and investment may contribute to the steady rise of the economy following the rebound," he added.

Moreover, the increase in Chinese consumer prices is likely to remain gentle in 2023, which means that the country's economy will not face too much pressure from inflation, Xu noted. As such, there is more space for the government to implement stimulus policies.

Xu also emphasized that the government's reinforcement of macroeconomic regulation is necessary for economic growth and is crucial for building a new industrial development model.

"China needs to expand domestic demand, optimize investment structure, ensure the safety of key industry supply chains, and form a high-quality circulation mechanism (for commodities and natural resources)," he concluded.

Source: Steelmint

Jan 3, 2023 11:57
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