Hong Kong
CNN
—
As China emerges from a three-year government-imposed Covid quarantine and moves closer to reintegrating with the world, expectations are high for the economy.
Beijing’s recent pivot From its strict zero-Covid strategy — it had long suffocation business — expected inject vitality Next year, it will become the second largest economy in the world.
COVID-19 lockdowns and border restrictions have thrown China out of sync with the rest of the world, disrupting supply chains and undermining trade and investment flows.
With the global economy currently facing significant challenges such as energy shortages, slowing growth and high inflation, China’s economic reopening could provide a much-needed and timely boost.
But economists say the reopening process is likely to be irregular and painful. country economy The first few months of 2023 will be a bumpy road.
Chinese Downturn in historic assets and Possible global recession They also added that headaches may increase in the new year.
“In the short term, I believe the Chinese economy is likely to experience turmoil instead of moving forward. The reason is simple: China is not ready to deal with the novel coronavirus.” company.
For nearly three years, China has stuck to a zero-tolerance approach to the virus, even as policies have caused unprecedented economic damage and widespread dissatisfaction. Profits collapsed and youth unemployment soared to record levels.
Amid mounting public unrest and financial pressure, the government suddenly changed course this month, effectively abandoning zero Covid.
The easing of restrictions is a long-awaited relief for many, but its suddenness has caught an unprepared public off guard, and in most cases Dodge for yourself.
“In the early stages, I think the reopening could lead to a wave of COVID-19, overwhelming the healthcare system and slowing consumption and production in the process,” Zhuang said.
Already, the rapid spread of the infection has forced many people indoors and emptied shops and restaurants. factory and company They are also forced to stop or reduce production as more workers fall ill.
Analysts at Capital Economics said: “Living with COVID-19 will be harder than many people assume.
They expect the Chinese economy to contract by 0.8% in the first quarter of 2023 before recovering in the second quarter.
Other experts also expect the economy to pick up after March. In a recent research report, HSBC economists forecast a 5% growth in 2023 as a whole, despite contracting by 0.5% in the first quarter.
China’s unplanned reopening isn’t the only thing holding back China’s economy. In 2023, experts will continue to watch how policymakers plan to fix the struggling real estate sector, which accounts for nearly 30% of GDP.
The industry’s crisis began in late 2021 when several high-profile developers defaulted on their debts while delaying or halting construction of second-hand homes across the country. It sparked a rare outcry by homebuyers who refused to pay mortgages on completed homes.
While Beijing made series of attempts to save the sector, including the unveiling 16 point plan Last month to ease the credit crunch – statistics still paint a bleak picture.
In the first 11 months of the year, property sales have fallen by more than 26%. Investments in this sector he fell by 9.8%.
At a key policy meeting earlier this month, top leaders vowed to devote himself to revitalizing the economy It has hinted at new measures to improve the financial condition of the real estate sector and boost market confidence in the coming year.
Analysts at Capital Economics said, “The measures announced so far have not been enough to spur the economic recovery, but policymakers have suggested that more support is on the horizon.
“This should give homebuyers enough peace of mind to boost sales, probably by the middle of next year.”
A possible global recession is another key concern shaping China’s economic landscape in 2023.
Trade was the engine of China’s economic growth earlier this year, as higher commodity prices and a weaker currency boosted exports.
But in recent months, the trade sector, which accounts for about a fifth of China’s GDP and generates 180 million jobs, has begun to show cracks from the slowing global economy.
China’s outbound shipments fell 8.7% year-on-year last month, worse than October’s 0.3% decline. This marked the worst performance since February 2020, when the Chinese economy stalled. almost stopped Among the first coronavirus outbreaks.
Countries around the world are facing recessions, and policy makers continue to raise interest rates to combat rapid inflation.
“[China’s] Exports have already reversed many pandemic-era booms,” analysts at Capital Economics said.
“But the looming global recession probably means we’ll have to go lower over the next few quarters.”
