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China Economy 2023 : Is there a prosperous outlook for Chinese’ economy in 2023? A Brief Exploration of Challenges and Opportunities for China’s economy in post-pandemic.

China Economy 2023 : Is there a prosperous outlook for Chinese’ economy in 2023? A Brief Exploration of Challenges and Opportunities for China’s economy in post-pandemic.

Business
Distribution of GDP in Mainland China

Under the continuous impacts of the COVID-19 pandemic since 2020, it is the third year that China finds itself situated in a tough economic situation alongside the worldwide recession. At the start of 2022, Premier Li set the economic growth target at around 5.5% for the year, which had been the lowest official goal in decades; however, the official data for economic growth slowed down to 3.3% in 2022 (Oecd).

Even though the predictive data modeled by OECD reveals that the economic growth will rebound to 4.6% in 2023, it is still lower than the unambitious goal of 5.5%. The reason for the unfavorable performance may be due to the strict zero-COVID policy and the universal lockdowns at the start of the year, but the situation mitigates by the more advanced and precise ones— the dynamic zero-COVID policies and precise and differentiated epidemic control strategies (He). Furthermore, there are mixed signals for Chinese economic performance in 2023 with opportunities and challenges, which will be discussed in the next two sections.  

Challenges
Global distribution of Chinese exports in 2006 as a percentage of the top market

With the reemergence of highly contagious new variants of COVID-19, there is a protracted disruption in the Chinese economy due to President Xi’s Zero Covid Policy. However, this increases economic risks and causes China’s growth to become uneven. Among all the sectors of the economy, risks and challenges stem from the real estate sector, which is the fifth critical indicator for economic performance (Song). Apart from that, China’s economy is proven to be vulnerable to difficulties connected to the global recession in 2023, and its sweeping negative influence on the Chinese economy will be inevitable.

Another challenge is the slump in job opportunities. Currently, China’s job market confronts a structural contradiction—the shortage of labor in manufacturing compares to the high demand of the real economy. The fluidity of new graduates who look for jobs is dissonant with the decreasing labor demand. Thus, it is difficult for them to find a suitable job. In 2023, with a higher unemployment rate and an increasing number of new graduates. As a result, China’s job market will only be under more pressure. Therefore, the challenge will require more innovative policies to revive enterprises and help them recover from the pandemic. 

Opportunities
Landsat 7 satellite image of Beijing Municipality with the surrounding mountains in dark brown

In 2023, the opportunity for growth of the Chinese economy mainly stems from its reopening path. Which signifies the ending of the “dynamic zero-COVID policy”. In addition, ground-breaking changes in the government’s reaction to the increasing COVID cases. Specifically, China’s reopening is prone to be a strong stimulus to asset prices in the next year. As Shan and other researchers comment, higher equity prices, modest higher rates, higher commodity demand, and a stronger RMB vs USD are anticipated next year (“China 2023 Outlook”). With more modest inflation compared to the western countries after its reopening, the core CPI inflation will increase from 0.7% to 1.2% next year. 

Secondly, the implementation of the new policies aiming at balancing economic development and the continuous battle with the pandemic will result in the growth of retail sales, consumer confidence, and even domestic tourism. With the rising consumption, rising investment from the business, in addition, the increase of imports and exports. As a result the indicators of GDP should rise, and the economy will then take strides toward its recovery. 

Conclusion
Traffic jam in the Beijing CBD

In 2023, the pandemic will still continuously influence and heighten uncertainty in Chinese economic performance. Compared to the zero-COVID policy that will significantly influence the Chinese economy and produce mixed signals for its growth, China is anticipated to experience a growth in economic development in 2023 due to more propitious and advanced reforms on the quarantine policies and the gradual opening-up. As four experts share their opinions towards the Chinese economy in the forum with China Daily, one of the most renowned and authoritative publishers in China, they expect more political improvements to boost the economy and social well-being (Song) In conclusion, China’s performance in economy will be rosy and prosperous if significant growth indicators are fulfilled. Lastly, which is significantly dependent on the more propitious policies related to COVID-19 lockdowns. 

Written by Yongyu Liu (Cloris)

China Economy 2023 : Is there a prosperous outlook for Chinese’ economy in 2023? A Brief Exploration of Challenges and Opportunities for China’s economy in post-pandemic.

Works Cited

“China 2023 Outlook: After Winter Comes Spring.” Goldman Sachs, 21 Nov. 2022, https://www.goldmansachs.com/insights/pages/china-2023-outlook-after-winter-comes-spring.html. 

He, Xiaolin, et al. “Governmental Inter-Sectoral Strategies to Prevent and Control COVID-19 in a Megacity:

A Policy Brief from Shanghai, China.” Frontiers, Frontiers, 1 Jan. 1AD, https://www.frontiersin.org/articles/10.3389/fpubh.2022.764847/full. 

Oecd. Economic Outlook No 112 – November 2022. : China (People’s Republic of China), 2022, https://stats.oecd.org//Index.aspx?QueryId=72653. 

Song,Jingwei. “Forum: Chinese Economy Outlook 2023.” Opinion – Chinadaily.com.cn, https://www.chinadaily.com.cn/a/202211/28/WS6383f0d7a31057c47eba14c6.html. 

China Economy 2023 : Is there a prosperous outlook for Chinese’ economy in 2023? A Brief Exploration of Challenges and Opportunities for China’s economy in post-pandemic.