China has witnessed significant changes since relinquishing its zero-COVID strategies in the beginning of 2023
- Economically: Q1 figures were much better than many expected, fueling higher hopes for China’s recovery, which has long been a key driver of global growth. However, signs have emerged of an uneven recovery between manufacturing and consumption.
- Politically: President Xi began his third term as China’s top leader during last month’s “Two Sessions” and a new government, headed by the newly appointed Premier Li Qiang, will oversee China’s economy for the next five years.
- Geopolitically: Things appear less promising, and tensions have shown few signs of abating. President Xi further cemented his relationship with Russian President Putin and China once again flexed its muscles across the Taiwan Strait after Taiwan’s President Tsai met with House Speaker McCarthy in the US. The relationship between China and the West is likely to remain tense for the foreseeable future.
FrontierView forecasts China’s GDP growth rate to be 6.2% for China in 2023
Our prediction is considerably higher than China’s official target of 5%, since we are confident that the recovery of consumption, which has shown robust growth since the Lunar New Year holidays, should continue to gather momentum and eventually be strong enough to offset the relatively sluggish growth in manufacturing and government-led infrastructure development. As a result, consumption will become the primary engine driving China’s growth this year and most of this recovery is expected to occur in the second half of 2023.
Our View on China’s Outlook in 2023
Multinationals should be prepared for a few more months of uncertainty but should have faith in a dynamic recovery in the second half of the year. Prepare for a rebound in growth, but don’t be surprised if there’s a lag of several months. FrontierView will continue to closely follow these developments in China, updating our analysis frequently.
- Blog post on China’s Q1 macro numbers
- Webinar conveying our view on where China is heading that provides advice to multinationals looking to capture opportunities in an increasingly complex business landscape
- China Market Review which examines and forecasts major macroeconomic issues, particularly focusing on demand
Executives are encouraged to utilize these resources to gain a better understanding of China’s rapidly evolving business environment.
Watch our recent China webinar to learn more
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