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5 Trends Shaping China’s Economic Growth in 2023

China's economy faces more challenges in 2023 after the lift of the COVID-19 ban.

First, the downward trend is deep and prolonged, and the negative output gap has not returned to positive for three years, which is unprecedented.

Second, the consumer service industry has become the hardest hit area this time, with significant losses in employment and small and micro businesses.

Third, the downturn in economic growth in the past few years may have a more prominent "scar effect" on future development.

How to get out of the economic downturn? With external demand severely affected by inflation and sluggish demand, can China usher in the next growth opportunity by stimulating real estate, infrastructure, and consumption?

Justice and efficiency are both main themes in the economics study. Overemphasis on efficiency will lead to uneven distribution, and overemphasis on justice will lead to a decline in efficiency. How to balance justice and efficiency has become the primary policy consideration of governments worldwide.

The world is ushering in an era of high-cost inflation. The costs of energy, food, labor, capital, trade, and technology are rising, which is not only caused by excessive currency issuance but also anti-globalization, trade protectionism, and geopolitical conflicts.

In 2023, China will launch a package of economic recovery plans to expand domestic demand and put all its efforts into economic development.

Trend 1

New infrastructure, green economy, urban agglomeration construction, rural revitalization, infrastructure, and high-end manufacturing will become the focus.

Trend 2

The new energy revolution ushered in explosive growth. The three traditional tracks of new energy vehicles, lithium batteries, and photovoltaic wind power are undergoing a significant reshuffle; The three trillion-level new tracks of autonomous driving, hydrogen energy, and energy storage are poised to take off.

Trend 3

A new concept of economy is taking shape. The healthy economy, Z generation economy, digital online economy, pet economy, elderly care economy, anesthetic medicine, pet economy, and the indoorsy economy will multiply.

Trend 4

Population aging and declining birth rate have become issues of great concern to China. From liberalizing childbearing to encouraging childbearing, China will vigorously build a childbearing support system.

Trend 5

Real estate has entered the era of stock differentiation, regional differentiation, housing enterprise differentiation, and location differentiation will become increasingly apparent. The age of urban agglomerations in metropolitan areas is coming, and the replacement of land finance by real estate tax is the general trend.

Standing at the turning point of a new cycle, the trough of the global economy and society often brews a new round of revolution in new technology, business models, economic systems, and industrial waves. As a saying in the Art of War, "Soldiers are impermanent, water is impermanent, he who can win by adjusting the tactics in accordance with the enemy situation shall be called as the God."

Will China follow this new change trend? Let's wait and see at the end of 2023.

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