2023 Q3 China Economic Monitor

 • China’s GDP grew 5.5% year-over-year (yoy) in 2023 H1, posting a steady economic rebound. In Q2, the economy rose by  6.3%, up from 4.5% in Q1, largely thanks to a low base. On a quarter-on-quarter basis, China’s GDP plummeted to 0.8% in Q2  from 2.2% in Q1, showing a slowdown in the domestic economic recovery. 

• With Covid-19 restrictions lifted, retail sales saw a solid recovery in H1 2023, and the contribution of consumption to economic  growth continues to expand. Consumer sentiment improved modestly and the share of households indicating higher savings  dropped slightly (but remains high).  

• Manufacturing and infrastructure investments held up relatively well, growing 6.0% and 10.7% in H1 2023, respectively.  However, momentum has weakened somewhat recently. Looking ahead, investment in high-end manufacturing and the  upgrading of equipment will likely continue to see robust growth.  

• The property market recovery has slowed down since April, the growth rate of key indicators such as new home sales and  property investment still declined. With the support of financing policies, the liquidity pressure of real estate companies has  improved, but the land transaction market is still in the doldrums.  

• China's exports fell in H1 2023 due to the weak external demand, but still outperformed other major Asian export-oriented  economies. . Despite slowing exports to advanced economies, China’s trade with emerging markets continued to rise.  Meanwhile, the structure of China’s exports is also changing with a rising share of advanced manufacturing products. New  energy vehicles (NEVs), solar panels, and lithium battery have become bright spots for China’s exports. 

• Overall, China’s economy is recovering since the removal of pandemic-related restrictions, with demand gradually improving. However, the recovery is still at an early stage and varies by sector. Improving household and corporate confidence is still the  key to unlock faster economic growth. The government has issued guidelines on boosting confidence in the private sector, and  a new round of property easing measures to revive growth. KPMG has lowered China’s GDP growth forecast to 5.5% in 2023  and expect the economy to grow 5.2% in 2024.








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