On 7th December 2022, China, the world’s second-largest economy abandoned key parts of the zero-Covid strategy imposed three years ago. Under the zero-Covid policy, China’s economy has withstood several challenges since the epidemic began. However, with China’s pivot away from its stringent zero-Covid strategy, the country’s economy has been exhibiting an uptick since late December and is expected to continue its recovery.
Service-related consumption, which had once suffered heavy losses due to the pandemic, is among the first sectors to see a revival. Aside from the booming consumer market, headway has been made in accelerating the resumption of work and production. Major projects nationwide are kicking off construction intensively, while most factories are running full throttle as orders pour in.
As of late December 2022, 99.5% of major projects in Chongqing had started construction again and factories in Hunan had set new output records since November, with confidence restored.
Economists and analysts say China’s economic recovery will accelerate this year as emerging industries such as consumption, services, and new energy vehicles are expected to regain strong growth momentum.
With a sustained and rapid recovery, China could become a major contributor to the global economy, which has been held back by struggling developed economies.
Since the announcement, the country has already seen major international organizations, investment banks, and consulting firms revising their GDP growth forecasts for this year to around 5%, citing stronger economic activity as the country’s economic fundamentals remain healthy and resilient.
What Is Forecasted & Expected On Post-Pandemic Recovery
V-Shaped Recovery
Economists expect the world’s second-largest economy to gain momentum in the first few months of 2023 on the back of relaxed Covid-19 curbs.
Xing Zhaopeng, a senior strategist at ANZ Research, told the Global Times in a recent interview that we will see a V-shaped recovery to pre-pandemic levels in the coming months.
Given the optimized COVID-19 response, China may reach the peak of the virus and bottom out on the economic front in the first quarter of 2023, Wu Jinduo, head of fixed income at the research institute of Great Wall Securities, told the Global Times.
Wu added that this indicates that the country is fully capable of passing the “post-pandemic stress test” as the economy moves toward a post-COVID-19 recovery.
At the same time, Cong Yi, a professor at Tianjin University of Finance and Economics, said economic indicators may show signs of recovery in February and March.
In addition, China will focus on expanding domestic demand and prioritize restoring and expanding consumption this year, according to the tone-setting Central Economic Work Conference, which was held in mid-December.
Goldman Sachs analysts have forecasted that the country will grow about 7% year-on-year in 2023, while the unemployment rate is expected to decline and average incomes are likely to improve this year – both contributing to the rebound of consumption.
Emerging sectors, including new energy vehicles, are expected to prosper steadily. The sales of China’s new energy vehicles saw explosive growth last year, with 6.89 million electric vehicles and plug-in hybrids sold, a 93% year-on-year increase, said the China Association of Automobile Manufacturers. Against this, this year’s sales could hit 8.8 million, according to UBS analyst Paul Gong.
Ultimately, China’s recovery is important for international corporations and the world economy.
Global Economic Growth
With the global economy now facing downward pressure, including energy shortages, slowing growth, and high inflation, China’s reopening and economic growth could provide a much-needed timely boost.
According to the World Bank’s latest Global Economic Prospects report, U.S. growth is expected to fall to 0.5% in 2023, 1.9 percentage points below previous forecasts and the weakest performance outside of an official recession since 1970.
Hence, the gap between China and the U.S. in GDP terms would widen in 2023, said Wu Jinduo, head of fixed income at the research institute of Great Wall Securities, expecting China to be one of the top growth engines for the global economy in 2023.
China’s annual foreign trade reached 42.07 trillion yuan (USD 6.27 trillion), up 7.7% year-on-year, topping the world for six consecutive years, according to the General Administration of Customs (GAC). The figure exceeded 40 trillion yuan for the first time, said the GAC.
Looking ahead to 2023, with the global economy in the shadow of a deep recession, China is likely to be the world’s most critical macroeconomic stabilizer, thanks to the stability of China’s macroeconomic policy and its commitment to deepening reform and opening up, Chen Jia, an independent researcher on global strategy, told the Global Times.
Compared with western economies, which have changed course several times, resulting in repeated shocks in global interest rates and capital markets, China’s macro policies have always maintained a dynamic balance within the range, Chen said.
International Trades & Supply Chain
China’s regional economic powerhouses such as Beijing and Shanghai are ramping up efforts to attract foreign investment by meeting with multinational companies to drive up consumption for post-Covid economic recovery.
“[Beijing] will unswervingly promote a higher level of opening up to the outside world and make greater efforts to attract and utilise foreign investment. This move will provide more opportunities and broader space for foreign enterprises to develop in Beijing,” Yin Li, the newly appointed secretary of the Beijing municipal party committee, said in a virtual meeting with Brian Roberts, chairman and CEO of Comcast Corporation.
Yin said the capital city is willing to deepen cooperation with Comcast Corporation to improve the operation of Beijing Universal Resort and accelerate China’s “huge domestic tourism consumption potential”, according to the Beijing Daily.
Yin added that Comcast is a “witness and a beneficiary of Sino-US cooperation”. The municipal party secretary said he hoped Comcast would continue to play an active role in economic and trade cooperation between the countries.
In mid-December, Chen Jining, the newly appointed secretary of the Shanghai Municipal party committee, also held a video meeting with Fabrizio Freda, president and CEO of Estée Lauder Group, according to the Shanghai Observer.
Chen said Shanghai welcomes enterprises from all over the world to share development opportunities in the city.
Shanghai would continue to create a “market-oriented”, first-class international business environment that followed the rule of law, he said, adding authorities were committed to providing better services for the development of all kinds of Chinese and foreign enterprises.
The wave of regional leadership meetings with multinationals has highlighted China’s determination to revive trade and foreign investment after the nation’s zero-Covid policy hobbled business operations with routine lockdowns and regular mass-testing.
Meanwhile, major provinces including Hainan, Zhejiang, Jiangsu and Guangdong, have dispatched business delegations overseas to seek trade orders and investment capital to prop up struggling economies.
How Stocks Performed As The Economy Recover
China stocks jumped to a four-month high on 16th January 2023, aided by strong foreign inflows, while Hong Kong shares edged up as investors doubled down their bets on economic recovery after Chinese health officials said COVID-19 infections in the country had peaked.
On the same day, China’s blue-chip CSI300 Index ended the session up 1.6%, while the Shanghai Composite Index climbed 1%. Hong Kong’s Hang Seng Index was 0.04% higher.
On the other hand, net foreign buying of China-listed stocks via Stock Connect hit a two-month high of 15.4 billion yuan (USD 2.29 billion). Net buying so far this year has exceeded USD 9 billion as foreign funds snap up Chinese financials and consumer stocks, according to Goldman Sachs.
“Overall, the latest data confirmed that the worst of China’s exit wave is behind us,” OCBC Bank wrote in a note.
Chinese infrastructure stocks also rose sharply as local governments announced new spending plans for big projects and set a bullish growth target for this year.
What’s Next: Navigating Growth
At this point, China seems to be one of the main pillars for the global economy once again as the country’s economy is shaking off the shadow of Covid-19, backed by huge potential and supportive policies.
With China back in business, it has boosted expectations of an economic revival this year, but it has also led to a sharp rise in Covid cases that economists say might hamper near-term growth.
Thus, China will have to navigate the threat of new Covid-19 waves and the country’s weakened global demand for its exports due to stringent COVID curbs.
| About Doo Prime
Our Trading Instruments
Securities | Futures | Forex | Precious Metals | Commodities | Stock Indices
Doo Prime is an international pre-eminent online broker under Doo Group, which strives to provide professional investors with global CFD trading products in Securities, Futures, Forex, Precious Metals, Commodities, and Stock Indices. At present, Doo Prime is delivering the finest trading experience to more than 90,000 clients, with an average trading volume of more than USD51.223 billion each month.
Doo Prime entities respectively holds the relevant financial regulatory licenses in Seychelles, Mauritius, and Vanuatu with operation centers in Dallas, Sydney, Singapore, Hong Kong, Dubai, Kuala Lumpur, and other regions.
With robust financial technology infrastructure, well-established partnerships, and an experienced technical team, Doo Prime boasts a safe and secure trading environment, competitive trading costs, as well as deposit and withdrawal methods that support 10 different currencies. Doo Prime also incorporates 24/7 multilingual customer service and extremely fast trade execution via multiple industry-leading trading terminals such as MT4, MT5, TradingView, and InTrade, covering over 10,000 trading products.
Doo Prime’s vision and mission are to become a financial technology-focused broker, streamlining international global financial products investment.
For more information about Doo Prime, please contact us at:
Phone:
Europe : +44 11 3733 5199
Asia : +852 3704 4241
Asia – Singapore: +65 6011 1415
Asia – China : +86 400 8427 539
E-mail:
Technical Support: en.support@dooprime.com
Account Manager: en.sales@dooprime.com
Forward-looking Statements
This article contains “forward-looking statements” and may be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “hope”, “intend”, “may”, “might”, “plan”, “potential”, “predict”, “should”, or “will”, or other variations thereon or comparable terminology. However, the absence of such terminology does not mean that a statement is not forward-looking. In particular, statements about the expectations, beliefs, plans, objectives, assumptions, future events, or future performance of Doo Prime will be generally assumed as forward-looking statements.
Doo Prime has provided these forward-looking statements based on all current information available to Doo Prime and Doo Prime’s current expectations, assumptions, estimates, and projections. While Doo Prime believes these expectations, assumptions, estimations, and projections are reasonable, these forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond Doo Prime’s control. Such risks and uncertainties may cause results, performance, or achievements materially different from those expressed or implied by the forward-looking statements.
Doo Prime does not provide any representation or warranty on the reliability, accuracy, or completeness of such statements. Doo Prime is not obliged to provide or release any updates or revisions to any forward-looking statements.
Risk Disclosure
Trading in financial instruments involves high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding the investor’s initial investment could incur within a short period of time. The past performance of a financial instrument is not an indication of its future performance. Investments in certain services should be made on margin or leverage, where relatively small movements in trading prices may have a disproportionately large impact on the client’s investment and client should therefore be prepared to suffer significant losses when using such trading facilities.
Please make sure you read and fully understand the trading risks of the respective financial instrument before engaging in any transaction with Doo Prime’s trading platforms. You should seek independent professional advice if you do not understand any of the risks disclosed by us herein or any risk associated with the trade and investment of financial instruments. Please refer to Doo Prime’s Client Agreement and Risk Disclosure and Acknowledgement Notice to find out more.
Disclaimer
This information is addressed to the general public solely for information purposes and should not be taken as investment advice, recommendation, offer, or solicitation to buy or sell any financial instrument. The information displayed herein has been prepared without any reference or consideration to any particular recipient’s investment objectives or financial situation. Any references to the past performance of a financial instrument, index, or a packaged investment product shall not be taken as a reliable indicator of its future performance. Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners and their respective employees, make no representation or warranties to the information displayed and shall not be liable for any direct, indirect, special or consequential loss or damages incurred a result of any inaccuracies or incompleteness of the information provided, and any direct or indirect trading risks, profit, or loss arising from any individual’s or client’s investment.
