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19 Oct 2023

Econ Digest

China’s economy is expected to grow close to the 5% target in 2023


  • The Chinese economy saw a higher-than-expected growth at 4.9%YoY in 3Q2023. The country’s economy expanded by 5.2%YoY during the first 9 months of 2023. China’s implementation of economic stimulus measures led to increased domestic consumption, boosting its 3Q2023 GDP to grow more than expected. Retail sales rose by 5.5% in September 2023. Meanwhile, the country’s GDP growth was 5.2%YoY during the first 9 months of 2023, driven mainly by the service sector. However, property investment continued to decline, indicating an ongoing downturn in the real estate sector, putting pressure on China’s economy.
  • For the remaining months of 2023, China’s economy will still face several significant risks, including: 1) Pressure from the property sector: A decline in home sales will be a key factor affecting the liquidity of real estate developers – this issue needs further monitoring; 2) Lower domestic spending when compared to pre-pandemic levels: Consumer confidence remains under pressure from the property sector slowdown; 3) Geopolitical issue: China may face the indirect effect of rising oil prices, despite its limited trade ties with Israel. However, the Chinese economy might not see any significant impact if the Israel-Hamas conflict does not escalate from its current level.
  • Despite numerous risks, China’s economy is set to reach its growth target of 5% in 2023 as the Chinese government is expected to implement additional economic measures. Close attention should be paid to the Third Plenum of the 20th Central Committee of the Communist Party of China slated at the end of October 2023 as the Chinese government is expected to raise its budget deficit target for year 2023.

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Econ Digest