Experts Predict China’s GDP Growth Rate to Reach 5.4% in 2023

According to a survey conducted by Nikkei and Nikkei Quick News, Chinese economists predict that the country’s economy will grow 5.4% in 2023, surpassing the government’s target of “around 5%.” This is up from the 4.7% forecast in December 2022.

Despite concerns that China’s economic recovery may slow down, many experts remain optimistic about the country’s growth prospects. Barclays Chief China Economist Jian Chang is forecasting 5.6% growth in 2023, citing improving activity data from January to February 2023, driven by a rise in retail sales, property investment, and home sales, and a strong rebound in services activity.

However, there are concerns that China’s economic recovery will be hampered by weak consumer sentiment and a delayed recovery in the labor market. Mizuho Bank Senior Economist Hideki Ito notes that the pace of recovery in consumption could slow down due to the lingering effects of the COVID-19 pandemic on the employment and income environment. Furthermore, sluggish export demand resulting from recent banking crises in the West and the U.S.-China confrontation is also a concern for many economists.

When asked about policy priorities for new premier Li Qiang, who took office in March, the most common answer from economists was restoring the confidence of companies. Francoise Huang of Allianz Trade believes that measures and reforms in favor of corporate confidence would help sustain the post-COVID recovery of the Chinese economy, nourish China’s innovation potential, and keep the country attractive to foreign investors despite geopolitical tensions.

The survey also reveals that economists expect China’s GDP to slow gradually after bouncing back in 2023, with average estimates for 2024 and 2025 growth at 4.9% and 4.6%, respectively. Bert Burger of Atradius calls for addressing structural problems, including weak export growth due to China losing competitiveness and the U.S.-China trade war, and aging demographics.

Overall, while there are concerns about potential risks to China’s economic recovery, many experts are optimistic about the country’s growth prospects. The government’s target of “around 5%” is considered relatively modest, and economists expect the recovery to be front-loaded as the services sector initially comes back while manufacturing remains steady. However, it remains to be seen how China’s economy will fare in the face of external risks such as weak global demand and geopolitical tensions.