An electric car was displayed at the Longfor Paradise Walk shopping mall in Yizhuang, Beijing, on Dec. 22. New energy vehicles have become a highlight in China’s economic development. Photo: Chen Mirong/CSST

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Since the beginning of 2023, several key macroeconomic indicators in the Chinese economy have shown improvement, and high-quality development is advancing steadily despite numerous challenges at home and abroad. As a result, some international organizations have revised their forecasts for China’s economic growth. For instance, the OECD’s latest economic outlook projects a 5.2% growth for the Chinese economy in 2023, an increase from its previous projection. Centering on the development status and future trends of the Chinese economy, CSST recently interviewed Enrique Dussel Peters, a professor of economics from the National Autonomous University of Mexico. 

Peters told CSST that China’s economy has shown significant improvement compared to the challenging phase of April and May 2023. “These positive trends might allow for a GDP growth of around 5% and even higher for the full year of 2023,” he predicted, adding that manufacturing and particularly services have remarkably increased their dynamism.

Peters observed that recent trends in China’s manufacturing, particularly high-tech manufacturing such as computer and communication equipment, have been very positive. “Substantial achievements in the composition of exports are all factors relevant to understanding the positive economic trends for the second half of 2023,” he said. 

For example, China has emerged as a leading exporter of both internal combustion and electric passenger cars. According to data from the China Association of Automobile Manufacturers, the country exported 3.9 million automobiles cumulatively from January to October 2023, exhibiting rapid year-on-year growth. 

China’s recent development and growth performance have been particularly impressive in the upgrading of high-tech industries, including solar cells, new energy vehicles, and chips, Peters commented. “As highlighted by China’s leadership, it is not only a matter of growth and development from a quantitative perspective, but particularly in terms of quality, i.e. GDP growth particularly through changes in the contribution of high-tech industries.” 

“China’s leadership is apparently supporting further growth in investments by generating incentives for import-substitution in high-tech sectors such as semiconductors and the creation of supplier systems for artificial intelligence, among others,” he continued. “The result of these upgrading policies, such as Huawei’s recently presented Mate 60 with the Kirin 9000 chip, has been impressive in several fields.”

There are, moreover, plenty of other segments of global value chains in which Chinese firms are close to state-of-the-art global innovation or have already become global leaders, Peters said. However, he warned that fierce competition between Western and Chinese firms will persist, exerting profound effects on international trade, FDI flows, academic exchanges, and the flow of information. 

Peters also shed light on the development of the Chinese real estate sector. On November 6, the People’s Bank of China, the central bank of the country, reiterated the intent to deepen market-oriented reform of the interest rate system, urging continuous efforts to increase the degree of marketization of mortgage interest rates, in order to better support first-time homebuyers and those seeking to improve their housing situation. 

Peters said that this move, as well as policies against speculation, will be relevant over the next years. New measures to lower mortgage rates and expand households eligible as first-time homebuyers are expected to inject new impetus into China’s real estate industry. 

According to the World Bank’s macroeconomic data, China’s macroeconomy is characterized by very high levels of savings, above 45% of GDP since 2004; high levels of investments, measured as gross capital formation with levels of above 40% of GDP since 2008; and resulting consumption expenditure levels below 55% of GDP since 2004. As a result, compared to other large economies, China has the option to significantly bolster its domestic market through investments and/or consumption, Peters added.

Edited by CHEN MIRONG