KPMG expects continued economic recovery of China, 5.7% growth in 2023

As China is shifting its priority to improving economic growth, KPMG expects the country’s economy to continue to recover and grow by 5.7 per cent this year and become a key engine of global growth again.

China is accelerating its establishment of a modern industrial system. KPMG expects manufacturing investments, digitalisation and energy transition to see rapid growth in 2023.

Consumer spending, especially for services and discretionary, will likely see a stronger rebound. Holiday spending during the 2023 Chinese New Year holiday saw a solid recovery.

KPMG estimates that China’s households have accumulated RMB 10 trillion of excess savings compared to the historical trend, as they became more cautious on spending and mobility restrictions also reduced consumption scenarios.

The re-opening and economic recovery will help improve consumer confidence and some of the excess savings may be released, which should support the recovery in consumption, the report noted.

On the investment side, KPMG expects technology upgrading and green transformation in the country to support manufacturing investment. Infrastructure investment should remain solid, but its growth will be limited by local government’s fiscal conditions.

Exports used to be China’s key growth engine during the past three years, but the trend has started to reverse. China’s exports have declined for five consecutive months since last October and the weakness is expected to continue as the global economy slows, the report said.

Despite the slowdown, the product mix of China’s exports is changing with increasing high-end manufacturing.

The Hong Kong (SAR) economy is also expected to recover this year, the report added.

Fibre2Fashion News Desk (DS)