Growth of 4.5% in the first quarter of 2023, exceeding forecasts.
The Chinese economy has been recovering since the lifting of pandemic-related restrictions, with demand gradually improving. In the first quarter, tax revenues rose by 0.5% year-on-year to 6,230 billion yuan, according to the Ministry of Finance.
China plays an important role in the global economy, but faces a number of challenges.
Recovery is still at an early stage and varies from sector to sector. China’s is giving mixed signals, and companies are approaching the second half of 2023 differently depending on their sector of activity. Investors seem to agree that growth prospects need to be analysed over the long term. Global challenges and potential conflicts are sure to create tensions not only in the way the world perceives China, but in the way China shows itself to the world. However, for companies having a stable presence in China, it’s clear that disinvestment is not on the agenda.
According to the Central Bank of China, Chinese monetary policy will continue to stability as its top priority in 2023. The central bank will adhere to prudent regulation and control, with an emphasis on national objectives. However, the renminbi fell to its lowest level in seven months against the dollar. This certainly helps the Chinese economy, still dependent on exports, by making the country’s goods cheaper to buy for the country’s main trading partners.
However, analysts are warning that the weakness of the Chinese currency reflects intensifying concerns about the country’s economic growth.
Sino-American relations are also creating tensions in several areas of the economy particularly in the world of technology, with unpredictable effects that are worrying many analysts, and European companies settled in China also seem to be suffering from economic contraction.
Finally, in 2022, China’s population experienced negative growth for the first time, occurring earlier than forecast, having a negative impact on the workforce and labour resources. However, the number of people completing higher education and secondary vocational education has risen considerably. By the end of 2022, the number of graduate students (including doctors), undergraduates and students in secondary vocational education stood at 58.09 million. In recent years, China’s overall labour productivity has risen sharply. Although there is still a significant gap between China’s and some developed economies, there is enormous room for improvement.
