China’s economic policies and their effects on the global economy
China’s economy is experiencing a shift from pandemic-related factors to a clearer forecast. Retail spending has been a key factor in compensating for the slowdown in manufacturing, with consumers’ wallets opening due to newfound confidence in the economy, pent-up savings, and better job security.
Recent retail sales have exceeded projections, with a 10.6% increase in retail sales in March compared to the same period last year. Analysts at China Beige Book have stated that new data shows evidence of a robust recovery in 2023, with property notching its best results since September 2022.
While manufacturing remains the core driver of China’s economic growth, industrial output rose less than expected. A survey of factory managers across the country showed more pessimism than the previous month, with Zhao Qinghe, a senior official at China’s National Bureau of Statistics, stating that “a lack of market demand and the high-base effect from the quick manufacturing recovery in the first quarter” contributed to the contraction in April. Despite this, there were bright spots in the data, with export orders rebounding from March and domestic orders holding steady.
Chinese authorities aim to boost the country’s economic expansion by promoting domestic consumption, and have outlined plans to provide targeted assistance to key industries, construction, and infrastructure through proactive fiscal policy and cautious monetary policy.
Investment banks have revised their predictions for China’s GDP growth in 2023, with the majority forecasting growth at or above 6%. JPMorgan is the most optimistic, forecasting a growth rate of 6.4% for the year.
