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China Economic Outlook. June 2023
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Published on Monday, June 19, 2023 | Updated on Thursday, June 29, 2023
China's economic recovery came to a halt in Q2 after registering a stellar performance at the beginning of the year due to sluggish external demand, anemic domestic housing market and weak market sentiments. Policy stance has shifted from "prudent" to "pro-growth".
Key points
- Key points:
- China’s growth stalled in the second quarter after a very strong start of the year, as the reopening effect ran out faster than anticipated.
- The CPI outturns hover around zero into the second quarter, indicating the unevenness in the recovery as well as weak market sentiments amid the sluggish property market and halted recovery.
- After surprisingly strong performance through April, the country’s export growth fell into a negative territory in May, in line with the trend exhibited by neighboring trade partners.
- The authority has already shifted its policy stance to be more pro-growth, evidenced by recent cuts of a few key policy rates, the first time since August 2022.
- A new round of policy stimulus is in the pipeline, which, we believe, is set to put China’s growth back on the right track in the second half of the year.
Documents to download
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2023Q3China-Economic-Outlook-June2023_edi.pdf English June 19, 2023
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I'm an economic analyst with a focus on global economic trends and policy dynamics. My expertise lies in interpreting economic data, understanding market sentiments, and predicting the impact of policy changes on different regions. I've closely followed China's economic landscape, and my insights are grounded in a comprehensive analysis of various indicators.
Now, regarding the article you shared on China's Economic Outlook in June 2023, let's delve into the key concepts:
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Economic Performance in Q2:
China's economic recovery, which showed a robust performance at the beginning of the year, experienced a slowdown in Q2. This deceleration was attributed to factors such as sluggish external demand, a weak domestic housing market, and overall subdued market sentiments.
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Inflation and Uneven Recovery:
The Consumer Price Index (CPI) outcomes remained around zero in the second quarter, indicating an uneven recovery. This suggests that despite pockets of strength, there are sectors facing challenges, particularly amid the sluggish property market and the stalled recovery in certain areas.
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Export Growth and Global Trends:
China's export growth, which exhibited a surprisingly strong performance through April, took a negative turn in May. This decline aligned with trends seen in neighboring trade partners, indicating a broader regional impact. External factors, such as global demand, likely played a role in this shift.
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Policy Stance Adjustment:
The Chinese authorities responded to the economic challenges by shifting their policy stance from "prudent" to "pro-growth." This shift is evident in the recent cuts of key policy rates, marking the first such move since August 2022.
-
Future Policy Stimulus:
The article mentions a forthcoming round of policy stimulus, signaling a proactive approach by the authorities. This anticipated stimulus is expected to reignite China's growth trajectory in the second half of the year.
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Key Players and Authors:
The article is authored by notable experts in the field, including Jinyue Dong (Senior Economist), Betty Huang (Economist), and Le Xia (Chief Economist). Their insights contribute to the credibility of the analysis.
In summary, the article provides a comprehensive overview of China's economic challenges, policy responses, and the outlook for the coming months. The shift towards a more pro-growth policy stance and the anticipation of further stimulus reflect a proactive approach to address the current economic headwinds.
FAQs
China's GDP growth is projected to rise to a 5.6 percent in 2023, led by a rebound in consumer spending. Growth will be led by a recovery in consumer demand, particularly for services.
What happened in China in June 2023? ›
21 June – 2023 Yinchuan gas explosion: At least 31 people are killed and seven injured by a gas explosion at a barbecue restaurant in the city of Yinchuan in the northwest Ningxia region. The explosion was caused by a leak in a liquefied gas tank inside the restaurant.
What is China's uncertain economic outlook for 2023? ›
The word to describe China's economy in 2023 is bumpy. After an expectations-exceeding growth of 4.5 per cent in the first quarter of 2023 following three years of strict COVID-19 prevention policies, China's GDP grew short of the market expectations by 6.3 per cent in the second quarter.
What is the China forecast for 2023? ›
The World Bank's China Economic Update released in December 2023 predicts that China's growth is projected at 5.2 percent in 2023 before slowing to 4.5 percent in 2024.
Is China's economy recovering? ›
China said its economy grew 5.3% in the first quarter compared with the same three months a year earlier, a faster pace than the 5.2% year-over-year growth rate that the country notched in the final quarter of 2023, China's National Bureau of Statistics said Tuesday.
What is the current economic situation in China? ›
Domestic demand in China has remained sluggish and contributed to low inflation, while the policy space for stimulus is constrained. Weak business confidence, in part driven by the property market downturn, continues to weigh on growth. Over the medium term, China's economy is expected to undergo a structural slowdown.
What year will China overtake US? ›
Consistent with these observations, we show that the timing of China's overtaking will be determined by the pace of US and Chinese nominal GDP growth and moves in the bilateral exchange rate. For a range of plausible assumptions, we find that overtaking occurs during the 2030s, most likely in the middle of the decade.
What are the problems in China right now? ›
China's Disregard for Human Rights
- Repression in Xinjiang.
- Fear of Arbitrary Arrest.
- Religious Freedom Abuses.
- Stifling Freedom of Expression.
- Forced Labor.
- Assault on Hong Kong's Autonomy.
- Severe Restrictions in Tibet.
Consumer price inflation in China averaged 2.0% in the ten years to 2022. The 2022 average figure was 2.0%.
Will China overtake the US economy? ›
However, even in the best-case scenario, China's ascent to surpass the United States as the world's largest economy will take longer than previously anticipated. Assuming a 5 percent annual growth rate, China might not overtake the United States until 2035.
In December 2022, the World Bank wrote in its China economic update that “after an uneven growth performance this year, China's economy is projected to recover in 2023.” By March, OECD economists opined in their Economic Outlook that household pandemic savings would drive growth to 5.3%.
How is China's economy compared to the US in 2023? ›
The US economy's strong performance in 2023, along with the challenges faced by China's economy, suggests that China's GDP overtaking the US is less likely. US gross domestic product rose 6.3% in nominal terms, compared to China's 4.6% gain in 2023.
What is the future economic outlook for China? ›
Industrial production in China is forecast to post growth of 5% in 2024, for the second year in a row. Its performance will outstrip the United States and an anaemic expansion in Europe, and raises the prospect of a renewed tensions between East and West.
Is China still in drought 2023? ›
Between winter 2022 and spring 2023, most areas of southwest China experienced significantly less precipitation and higher temperatures than in a normal year, according to Beijing's ministry of emergency management.
What is China's recovery forecast? ›
The IMF expects China's gross domestic product (GDP) to grow by 4.6 per cent this year, before slowing to 4 per cent in 2025, as a result of ongoing property sector strains, which would further dampen private demand and confidence, and also add to local government budget strains.
Will China's economy rebound strongly in 2023? ›
Zooming in on China, we saw a strong post-Covid rebound in 2023, with growth exceeding five percent. In the medium-term, China will continue to be a key contributor to global economic growth. While low productivity growth and an aging population are factors affecting growth, there are also tremendous opportunities.
What year will China overtake the US economy? ›
However, even in the best-case scenario, China's ascent to surpass the United States as the world's largest economy will take longer than previously anticipated. Assuming a 5 percent annual growth rate, China might not overtake the United States until 2035.
What is the economic update in 2023? ›
Description: The January 2023 World Economic Outlook Update projects that global growth will fall to 2.9 percent in 2023 but rise to 3.1 percent in 2024. The 2023 forecast is 0.2 percentage point higher than predicted in the October 2022 World Economic Outlook but below the historical average of 3.8 percent.
