Looking back at 2023: China's economy forges ahead amidst continuous pressure

2023 was a crucial year for China's economic recovery post-pandemic. Having navigated a turbulent 2023, the Chinese economy is poised to meet its growth targets set at the beginning of the year. Driven by strong resilience and a continuous influx of new driving forces, the Chinese economy continues to forge ahead, once again demonstrating its position as the world's largest growth engine with impressive results.

On August 30th, the "Zhongwaiyun Haikou" vessel departed from Qingdao Port in Shandong, heading for Chennai Port in India.

On November 10th, at the 6th China International Import Expo (CIIE), an exhibitor from Yemen (right) introduced his unique handicrafts to visitors. Photo by Xinhua News Agency

On September 6th, at the 2023 IAA Mobility in Munich, Germany, visitors viewed new energy vehicles from the Chinese automobile brand BYD. Image courtesy of Visual China

Top performer

Recently, international organizations such as the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) have once again raised their forecasts for China's economic growth in 2023. The IMF has significantly increased its prediction from 5% to 5.4%, and believes that China will contribute about one-third of the global economic growth momentum in 2023.

This year's National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) set an economic growth target of around 5%. Faced with a complex and severe international environment and arduous domestic reform, development, and stability tasks, China's economy achieved a year-on-year growth of 5.2% in the first three quarters.

Amidst persistent pressure, the Chinese economy has charted a course of recovery and improvement. The foreign trade sector, in particular, has seen its stabilizing trend continue to consolidate despite the slowdown in global economic growth and contraction in external demand. In the first 11 months, the total value of goods trade imports and exports reached 37.96 trillion yuan. In November alone, China's total goods trade imports and exports reached 3.7 trillion yuan, with a monthly growth rate increasing from 0.9% year-on-year in October to 1.2%, maintaining positive growth for two consecutive months.

Colin Bell, CEO of HSBC Europe, told this reporter that, as the world's second-largest economy, China's consumer market has continued to accelerate its recovery this year, despite numerous challenges. China also possesses a large number of excellent companies that are crucial to the future development of the industry. He believes that the Chinese economy will continue to maintain steady growth.

The Central Economic Work Conference held recently stated that 2023 is a year of economic recovery and development after three years of COVID-19 prevention and control adjustments. To prepare for the economic work in 2024, it is necessary to consolidate and strengthen the upward trend of economic recovery. Wang Yiming, vice chairman of the China Center for International Economic Exchanges, said that the positioning of next year's economic work in the Central Economic Work Conference shows that the Chinese economy has entered a trajectory of trend recovery. In the face of numerous unfavorable internal and external factors, China's economy has withstood external pressure and overcome internal difficulties this year, generally achieving a basic situation of high growth rate, stable employment, low prices, and balanced international payments. This year, China's economic growth rate will be significantly higher than that of major economies, ranking among the top in emerging markets, and China remains the largest engine of global economic growth.

Positive outlook on China

Is foreign capital "fleeing China"? This is a question often raised in recent years against the backdrop of a global economic slowdown caused by factors such as the pandemic and geopolitical conflicts, and adjustments to industrial and supply chains.

Data released by the Ministry of Commerce on December 21 shows that in the first 11 months of this year, China's actual utilized foreign capital amounted to 1.04033 trillion yuan, a year-on-year decrease of 10%, but 48,078 new foreign-invested enterprises were established, a year-on-year increase of 36.2%. In the manufacturing sector, actual utilized foreign capital in high-tech manufacturing increased by 1.8%; in the service sector, actual utilized foreign capital in R&D and design services increased by 9.1%.

“The increase in the number of newly established foreign-invested enterprises and the decrease in the total amount are related to the increase in international capital market financing costs after the continuous interest rate hikes by the Federal Reserve. Large projects require financing, while small and medium-sized projects rely more on their own funds,” Bai Ming, member of the Academic Degree Committee and researcher at the Chinese Academy of International Trade and Economic Cooperation, told this reporter. The more than one-third year-on-year increase in the number of newly established foreign-invested enterprises in the first 11 months demonstrates that the attractiveness of the Chinese market to foreign investment remains strong.

How to view the Chinese market? Foreign investors are "voting with their feet." In early November, at the 6th China International Import Expo (CIIE), the first to be fully held offline after the pandemic, 3,486 companies from 128 countries and regions participated in the enterprise exhibition, setting a record high. The number of Fortune 500 companies and industry leaders also exceeded previous levels.

The "2023 Third Quarter Survey Report on China's Foreign Investment Business Environment" released by the China Council for the Promotion of International Trade (CCPIT) at the end of October this year shows that more than 80% of surveyed foreign-invested enterprises rated China's business environment as satisfactory or above. 70% of surveyed foreign-invested enterprises tend to "maintain stability" in their industrial chain layout in China, an increase of 4.57 percentage points compared with the second quarter. 80% of surveyed foreign-invested enterprises expect their profits to remain flat or increase this year, and nearly 90% expect their profits to remain flat or increase in the next five years. In terms of development opportunities, for three consecutive quarters, foreign-invested enterprises have considered "technological innovation and R&D" to be the greatest development opportunity in the Chinese market.

Innovation-driven development

At the end of November, a report from a German research institution attracted widespread attention in China. The report shows that from January to September, Chinese manufacturers sold a total of 3.4 million vehicles abroad, exceeding the traditional two major automobile manufacturing countries, Japan and Germany. The report predicts that China will become the world's largest automobile exporter this year.

Of the 3.4 million vehicles exported by China in the first nine months, 24% were electric vehicles, more than double the figure for 2022. In the EU electric vehicle market in 2022, Chinese brands accounted for 8% of the market share, and this is expected to increase to 15% by 2025. Wang Xia, chairman of the China Council for the Promotion of International Trade's Automobile Industry Branch, said that the increasing popularity of Chinese automobiles in overseas markets is due to their comparative advantages in electrification and intelligence.

“The rapid advancement of a new round of technological revolution and industrial transformation is a basic context of the global development pattern, reshaping the rise and fall of national competitiveness and the global competitive landscape, and also changing the relationship between China and the world. In this technological revolution, China has unprecedentedly entered a relatively advanced position,” Wang Yiming said, adding that the key to promoting high-quality development lies in technological innovation, and new energy vehicles are a good example of high-quality development industries. China's new energy vehicles not only have strong growth in production, sales, and exports, but their supply chain technology is also in a leading position. In contrast, Western traditional automakers are reluctant to abandon their traditional baggage and find it difficult to let go.

The rapid development of technological innovation capabilities in recent years has provided a continuous influx of new impetus for promoting high-quality development of the Chinese economy. In the "2023 Global Innovation Index" released by the World Intellectual Property Organization (WIPO) in September this year, China ranked 12th, the only middle-income economy among the top 30, ahead of France and Japan.

Because of its optimistic outlook on China's rapidly developing new energy vehicle industry, the renowned multinational corporation Zeiss has established its global new energy vehicle operations headquarters in Shanghai. Foster, President and CEO of Zeiss Greater China, told this reporter that R&D innovation capabilities are one of the important reasons why Zeiss has taken root in the Chinese market. Zeiss will continue to increase its investment in China, expand its R&D and innovation capabilities, and explore a high-quality development path for local development and scientific research in China.

Eyewitness Account

Two Toys for a Friend, the Foundation of a Brand

Just buying two toys as gifts for a friend led to the creation of a brand. Recounting her entrepreneurial journey, Henan native Ma Yuxia said with deep feeling, "Facts have proven that following national policies is absolutely the right path."

Ma Yuxia and Peruvian Alejandra, partners in "Warm Paca," attracted attention at the sixth China International Import Expo (CIIE) in November. As Peruvian artisans Mamani and his wife Gloria crafted alpaca toys on-site, crowds of onlookers gathered to take photos, and orders poured in, "growing exponentially."

Bringing alpaca toys to China was purely "accidental." After graduating from university, Ma Yuxia worked in South America for seven or eight years, frequently visiting Peru. She loved Peruvian alpaca products and had always wanted to sell them in China. In 2016, she went to Peru specifically to investigate alpaca wool clothing, but the styles and prices were unsuitable, and the deal fell through. While strolling the streets before returning to China, Ma Yuxia was attracted to alpaca toys sold by a small workshop and bought two to give to clients. Unexpectedly, the clients loved them and immediately ordered 1,000.

This presented a challenge for Ma Yuxia. China and Peru are 17,000 kilometers apart, and her purchase was impromptu; she hadn't kept the seller's contact information. However, having loved business since childhood, she didn't want to miss this opportunity. She called Alejandra, a woman she had met while investigating Peruvian clothing factories. Alejandra helped her find the toy makers—Mamani and Gloria.

"When I first met Mr. Mamani, his house was a simple structure of makeshift materials; in 2019, the dilapidated shack became a brick house; when I visited again this August, he had built a three-story building, beautifully decorated, with a full set of home appliances, leather sofas, a car, and a dedicated workshop for producing alpaca toys." Ma Yuxia said that after opening the Chinese market, Mamani's family income increased from $10,000 a year to $600,000 a year. Previously, for ordinary Peruvians like Mamani, "China" was just a word. After becoming wealthy through the Chinese market, Mamani and those around him deeply admire China.

Besides Mamani's family, over 400 people from more than 20 local families have become artisans specializing in orders for China. "Their previous income was low and unstable. We provide orders year after year, and the continuous and stable income has greatly improved their lives." Ma Yuxia introduced that "Warm Paca" currently has more than 30 stores in over 20 Chinese cities. Sales are 20 times higher than in 2018, importing more than 100,000 alpaca wool products from Peru annually, still unable to meet demand.

"The first phase of the China-Peru "Belt and Road" initiative's flagship project, the Chancay Port in Peru, is expected to be completed by the end of next year. At that time, it will only take 28 days to ship our products from Peru to China, more than half the current 60 days, significantly saving time and costs. This is a benefit of national policies for small businesses. I'm fortunate to have caught a good time and good policies!" Ma Yuxia named her brand Warmpaca, hoping that the products would bring warmth to consumers and more income to Peruvian artisans. "With the right time, place, and people, and with such a large Chinese market, I believe our business will become increasingly prosperous!" Reporter Jie Yazhen

Perspectives

Jeffrey Sachs, Professor of Economics at Columbia University:

China's Economy Possesses Fundamental Advantages

My confidence in the Chinese economy stems from its fundamental advantages: high national savings rate; substantial investment in infrastructure, education, R&D, and business development; excellent education and world-class universities; strong scientific research progress; and leading businesses in new technologies such as 5G, electric vehicles, and synthetic fuels.

Jim Rogers, Founder of Quantum Fund and Investor:

I Want to Invest More in China

The impact of the pandemic and real estate on the Chinese economy is coming to an end, and it is gradually returning to prosperity. The US attempt to restrict China's economic and technological development with a policy of "small yard, high walls" is not correct. The correct policy is to open up more trade, more tourism, and more investment. I am looking for new investment opportunities in China, and I want to invest more, not less, in China.

Pamela Coke-Hamilton, Executive Director of the International Trade Centre:

China Is a Resilient Market

It has been proven that amidst global economic headwinds, China is a resilient market. According to our analysis, China imported $2.7 trillion worth of goods last year, and the value of imports has grown by 8% over the past five years—these are positive signs. Therefore, we have good reason to remain optimistic about China's responsible role in global trade.

Wilawan Pitchayonpati, Director of the Thailand-China Belt and Road Initiative Research Center:

China's Innovation Provides Tremendous Momentum for Global Development

Since I came to China for my undergraduate studies, the changes in China have been remarkable. Now China is the world's second-largest economy, and "Made in China" and Chinese innovation are providing tremendous momentum for global development. China's well-established industrial system and its hardworking and intelligent people will help China gain an advantage in the wave of new energy and artificial intelligence technologies.

Source: Beijing Daily