'Strong' consumption, investment recovery to boost growth in 2023

Updated: Mar 10, 2023 By Zhang Yue China Daily Print
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Adviser: With more favorable policies expected, real estate sector will rebound

China's economy is likely to see a forceful rebound in 2023 on the back of a strong recovery in consumption and investment, while more favorable policies can be expected for the real estate sector, a political adviser said.

Zhang Bin, a member of the National Committee of the Chinese People's Political Consultative Conference and also deputy director of the Institute of World Economics and Politics at Chinese Academy of Social Sciences, made the remarks amid the ongoing two sessions.

The Government Work Report, which was made public on March 5, aims for an economic expansion of around 5 percent for 2023. It also said that China is ready to expand market access for foreign investors, prop up consumption, and curb risks in the real estate sector.

"I think 2023 will be a good year for the Chinese economy, with a very strong recovery expected in consumption and investment," said Zhang.

He said that this year consumption will be the major contributor to recovery.

"With China's optimization of pandemic control measures, consumption growth is likely to see a robust rebound. While the overall annual growth target is set at around 5 percent, I think consumption alone will generate some 4 percentage points of GDP growth this year," he said.

Figures from the National Bureau of Statistics show that consumption has already picked up in the past two months. The consumer price index in January came in at 2.1 percent higher than a year earlier, up from the 1.8 percent annual gain seen in December, with airfares, movie tickets and travel prices all rising notably.

The index gained year-on-year in February by 1 percent, figures from the National Bureau of Statistics showed on Thursday.

Noting that the recovery of the real estate sector, which remained largely in the doldrums in the past year with declining investment, is a key variable, Zhang is confident in the sector's recovery and believes that more supportive policies will be in the pipeline.

Both the optimization of COVID-19 containment measures since December and the recent favorable policies toward real estate developers bode well for the sector's recovery this year, he said.

On Jan 13, a draft plan was released by the government to boost financing for quality property developers, including adjusting borrowing curbs on them. Efforts are expected to guide quality developers' balance sheets back into a safe range, particularly for relatively large property firms that are systematically important.

"We expect to see more supportive policies for the real estate sector this year, for example, toward mortgage rates and lending rates to developers," Zhang said.

Another key factor to notice, Zhang said, is the investment in the real estate sector is likely to pick up.

"There was a lot of unfinished housing in the last year. In addition, this year, with more favorable financial conditions, there will be enough cash flow for housing projects. This will be a very big contribution to investment in the real estate sector," he said,

On Tuesday, China's Minister of Housing and Urban-Rural Development Ni Hong said that he has full confidence in the recovery of the nation's housing market, given a fast rise in transactions.

Commercial housing sales in China ended 13 months of decline in January, Ni said.

"The overall demand for new housing is actually in decline mainly because of the country's economic structural and demographic changes," Zhang said. "I think China may need certain kinds of policy-oriented institutions to help the market, because the recovery of the real estate sector is very important for the economy."

This year is Zhang's first year of participation in the two sessions as a member of the National Committee of the CPPCC. His proposal this year is about establishing policy-oriented financial institutions to help migrant workers and low-income families finance their housing.

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