China on track for rapid post-Covid economic recovery in first half of 2023, official forecasts

After some reopening jitters, the country can expect economic activity to come back to life, particularly in the second quarter, Han Wenxiu says
Authorities must also support smaller businesses that have taken a huge hit in the three years of zero Covid, former statistics chief says

Coronavirus China

Ji Siqi

Published: 1:01am, 19 Dec 2022

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Despite short-term interruptions from reopening, China’s economy will recover quickly in the first half of next year, a senior economic official has forecast.

Han Wenxiu, deputy director of the General Office of the Central Financial and Economic Affairs Commission, offered the assessment after Beijing renewed its commitment to get the economy back on track during the annual tone-setting Central Economic Work Conference on Friday.

“The impact of optimising the pandemic prevention and control measures on economic operation will be a J curve,” state news agency Xinhua quoted Han as saying at a conference hosted by the China Centre for International Economic Exchanges on Saturday.

“It will disturb the economy in the short term, but will be a major boon for the whole year.

“It is expected that in the first half of next year, particularly in the second quarter, the resumption of work and normal life will be accelerated, and economic vitality will occur at an accelerated pace.”

He said China’s economic fundamentals – resilience, great potential, vitality and sustainable long-term growth – remained unchanged, and the compounding effects from reopening, and more supportive fiscal and monetary policies would support the economy in 2023.

“We have the confidence, conditions and ability to promote the overall improvement of China’s economic operation,” he added.

11:33

Trace, test, lock down, repeat: Three years under China’s zero-Covid strategy

China’s pivot away from its stringent zero-Covid strategy, which hindered the effects of conventional policy tools and suppressed gross domestic product (GDP) growth, has enabled the authorities to shift their focus back to shoring up the economy.

While China is set to miss this year’s 5.5 per cent GDP growth target set in March, the market generally expects economic growth to be around 5 per cent for 2023.

In a front-page article on Sunday, Communist Party mouthpiece People’s Daily reaffirmed the official expectations of a recovery next year, saying the outlook was based on the advantages of China’s economic development system, demand, supply, and labour, as well as the continuous effects of supportive policies.

“We must strengthen our confidence in doing economic work well,” the article quoted President Xi Jinping as saying during last week’s work conference.

Han said that with a looming global recession, priority must be given next year to China’s recovery and expansion of domestic consumption.

“This is a long-term strategy to actively respond to changes in the internal and external environment and enhance the initiative for development,” he said.

“We must insist on deepening supply-side structural reform throughout the entire process of economic work, create effective demand through high-quality supply, and support the expansion of domestic demand through various methods and channels.”

03:16

China opens thousands of ‘fever clinics’ as it shifts Covid focus from prevention to treatment

Also at the conference on Saturday, Ning Jizhe, deputy director of the Committee on Economic Affairs of the National Committee of the Chinese People’s Political Consultative Conference, said the government must promote consumer industries, especially those relying on human contact.

“In the past three years, the spread of the Covid-19 pandemic has seriously affected the survival and development of sectors such as commercial retail, catering, accommodation, tourism, entertainment, transport and travel,” said Ning, the former head of the National Bureau of Statistics.

“It has hit the income and jobs of hundreds of millions of self-employed households and those involved in smaller businesses.

“[We must] take effective measures to help them recover.”

On Sunday, the Ministry of Transport issued a notice on the full restoration of nationwide road passenger transport services, saying domestic passengers would no longer have to present negative Covid-test results or a health code when travelling.

Passengers would also not be tested nor asked to give personal information upon arrival at their destination, the ministry said.