China's economy is set to continue its recovery — and at a faster pace — this year, as consumption, services and emerging industries, such as new energy vehicles, are expected to regain strong growth momentum, according to economists and analysts.
With continued and faster recovery, China, the world's second-largest economy, can be a major contributor to the global economy, which has been held back by struggling developed economies, they said.
After announcing the optimization of COVID-19 control measures on Dec 7, China has seen major international organizations, investment banks and consultancies raise their forecasts for its GDP growth to about 5 percent this year, citing stronger economic activity as the country's economic fundamentals remain sound and resilient.
"In the medium term, the resilient fundamentals of the Chinese economy will provide strong potential for the recovery," said Denis Depoux, global managing director of consultancy Roland Berger.
"With relaxation of COVID measures, sectors that have been most disrupted by COVID have much room to recover, such as the services industry, food, catering and retail, tourism, entertainment and so on. China has 1.4 billion people, and per capita GDP now exceeds $10,000, which makes it the world's biggest consumer market, with the greatest potential," he told China Daily.
China will focus on expanding domestic demand and give priority to restoring and expanding consumption this year, according to the tone-setting Central Economic Work Conference, which was held in mid-December.
Goldman Sachs analysts have forecast that the country's consumption will grow about 7 percent year-on-year in 2023, while the unemployment rate is expected to decline and average incomes are likely to improve this year — both contributing to the rebound of consumption.
Emerging sectors, including new energy vehicles, are expected to continue to prosper. China's sales of new energy vehicles saw explosive growth last year, with 6.89 million electric cars and plug-in hybrids sold, a 93 percent year-on-year increase, said the China Association of Automobile Manufacturers. This year's sales could reach 8.8 million, according to UBS analyst Paul Gong.
China's recovery is important for international corporations and the world economy.
Jens Hildebrandt, chief representative of the Delegation of German Industry & Commerce Beijing, said: "The Chinese market is of paramount importance to many German companies. ... German companies expect growth in most industries — especially in the fields of decarbonization, e-mobility and connected driving."
Jenny Huang, senior director of China corporate research at Fitch Ratings, said, "China, as the world's largest manufacturing center, has set up a very robust ecosystem, including a very comprehensive supply chain and also a very efficient infrastructural network."
Chen Dong, head of Asia macroeconomic research at Swiss financial company Pictet Wealth Management, said the improving Chinese economy will help stabilize global supply chains. "This is a favorable development," Chen said, adding that given the current development of the COVID-19 situation, the economy could start to rebound strongly at the end of March.