/ world today news/ The country maintains its position as the second largest retail market in the world
As economic activity in China recovers following the lifting of anti-COVID restrictions, the outlook for China’s economic development in 2023 is improving. Now Chinese economists are preparing proposals for the spring session of the Chinese National People’s Congress, which will be included in China’s socio-economic development plan for the current year.
The prevailing view is that China’s economy will show a confident recovery from last year’s low base and GDP growth will recover to above 5%. This can stimulate global economic growth and, accordingly, the demand for energy carriers with increasing prices for them. For Russia, this course of events is favorable, given the West’s attempts to limit our country’s export earnings through various price “ceilings”.
In 2022, China’s GDP grew by 3% year-on-year to 121 trillion yuan ($18 trillion) and per capita is $12,000, which is close to high-income countries as defined by the World Bank.
The added value of industries producing various raw materials increased by 5.6%, and their contribution to the total industrial growth of the PRC reached 50.3%. Value added in industry grew by 3.6% year-on-year, while fixed capital investment increased by 5.1%. China’s domestic transport and tourism industries are recovering rapidly. Domestic flights have recovered by more than 80% from pre-Covid 2019 levels.
Proposing a GDP growth of at least 5% as a planned goal for 2023, the PRC is starting from a longer-term goal – to achieve by 2035 the GDP per capita characteristic of middle developed countries. For this purpose, China’s GDP per capita must at least double by 2035, which is only achievable with an annual growth rate of 5%.
At the same time, the central authorities proceed from the obligations assumed by the provinces. Most provincial-level regions have set GDP growth targets for 2023 in the 5-6.5% range. Four out of 31 provinces aim to achieve annual GDP growth above 7%, while 20 provinces have set targets of around 6%. This means that local governments have resources for economic acceleration.
The emphasis is placed on stimulating domestic consumption. This has been accompanied by an increase in household savings during the years of anti-COVID restrictions. And although China’s retail sales fell 0.2% in 2022 to 43.97 trillion yuan, China remains the world’s second-largest retail market.
Each Chinese region, depending on its economic specialization, focuses on the growth of consumer demand for a certain category of goods and services. For example, China’s most economically powerful province, Guangdong, aims to support the consumption of high-quality and high-tech goods such as new energy vehicles, environmentally friendly and smart home appliances; Beijing plans to develop digital, cultural and environmental consumption; Shanghai seeks to deepen its development as an international trade and financial center.
East China’s Shandong province will boost sales of cars, electrical appliances and other high-value goods. Authorities in central China’s Henan province will encourage cities to expand preferential car purchase policies, providing subsidies of up to 5 percent of the price of each car sold.
Investments in real estate, the construction of industrial and road transport infrastructure, the green economy (carbon-free production, vehicles powered by non-fossil energy sources) and digitization have been announced as key areas of industry development.
Particular hopes are placed on the construction industry and the real estate market. Last year, real estate investment in China fell 10% year-on-year, remaining a key drag on growth. In 2023, it is planned to focus mainly on the restructuring of developer debts and bank loans for the acquisition of high-quality real estate.
Some Chinese experts fear an adverse external impact next year on China’s international trade, which is one of the country’s most important sources of economic growth. In 2022, strict US restrictions on trade with China, particularly in the semiconductor market, led to a decrease in exports of Chinese products.
Therefore, in addition to betting on the domestic market, the PRC is exploring factors that favor exports. For example, the EU’s short-sighted energy policy, combined with anti-Russian sanctions, has limited the production capacity of such energy-intensive industries in Europe as the chemical industry and steel production. It is expected that Chinese companies in these sectors will be able to capture a large share of the Western market.
Raghuram Rajan, a former governor of India’s central bank, believes that rising demand from China will raise commodity prices and intensify competition between China and the EU for the LNG market. And the increase in demand for natural gas may push the implementation of new projects for Russian gas pipelines in China.
The development of trade within the framework of the Regional Comprehensive Economic Partnership Pact contributes to the increase of Chinese exports. Trade between the PRC and the other signatories, in particular the ASEAN member states, is gradually catching up with the trade with the European Union in terms of volume. This process will accelerate after the drop in shipping rates.
The upcoming 2023 Socio-Economic Development Plan will apparently reflect the 2022 reduction of the PRC’s population by 850,000 people (on an annual basis) to 1.41175 billion. This is a long-term trend. Some experts have suggested lifting all birth restrictions, warning that negative demographic factors could undermine China’s economic growth potential.
Translation: ES
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