The Chinese economy is predicted to grow by 5.4% in 2023 following its modest growth of 3% in 2022, according to a new report from GlobalData.
China – the world’s largest market for construction equipment sales – is reported to be benefitting economically from the lifting of the country’s zero-Covid policy as well as institutional reforms.
In August 2022, the Chinese government announced approximately US$1 trillion investment in infrastructure megaprojects, which is expected to boost the construction and related activities. GlobalData projects that construction activities in China will grow at an average annual rate of 9.3% over 2023-25.
China’s economy began 2023 on a strong note with a 4.5% growth in GDP in Q1 2023 on an annual basis, up from 2.9% in Q4 2022. The rebound was driven mainly by consumption, with retail sales growing by 10.6% on an annual basis in March 2023, the highest level since June 2021. Industrial production also showed steady growth, up 3.9% in March 2023 compared to 2.4% in January and February 2023 combined.
“The ending of China’s self-imposed isolation in December 2022 is likely to boost growth in many parts of the world, particularly for countries that export commodities to China,” said Maheshwari, economic research analyst, GlobalData.
“Countries that export commodities such as copper, zinc, nickel, and iron ore could benefit from increased demand from China. In addition, the end of restrictions in China should help to resolve disruptions in the global supply chain, leading to increased efficiency and productivity.”
GlobalData added that it expects the inflation rate in China to increase from 2.0% in 2022 to 2.3% in 2023 – within the Chinese government’s target of 5%.
In addition to the positive factors mentioned in the previous article, China's ongoing technological advancements are expected to play a significant role in driving the country's economic growth in 2023 and beyond. China has been heavily investing in various technological sectors, such as artificial intelligence (AI), 5G infrastructure, renewable energy, and electric vehicles (EVs), positioning itself as a global leader in innovation and technology.
The Chinese government's commitment to promoting technological development is reflected in its "Made in China 2025" initiative, which aims to transform China into a high-tech manufacturing powerhouse. This initiative has led to substantial investments in research and development, fostering innovation, and nurturing a robust ecosystem for tech startups and companies.
The advancements in AI and automation are expected to enhance productivity and efficiency across industries, leading to increased competitiveness in the global market. China's focus on AI-powered technologies, such as robotics, autonomous vehicles, and smart manufacturing, is likely to revolutionize traditional industries and drive economic growth by optimizing production processes and reducing costs.
Furthermore, the deployment of 5G infrastructure across the country is expected to unlock new opportunities in sectors like telecommunications, internet of things (IoT), and e-commerce. The high-speed and low-latency connectivity provided by 5G networks will enable the development of innovative applications and services, fueling digital transformation and economic expansion.