What’s new: China is expected to fully lift its Covid restrictions in the third quarter of 2023, leading to a dramatic economic rebound, said Hu Yifan, regional chief investment officer and chief China economist at UBS Global Wealth Management.
The estimate echoes a forecast by Bloomberg economists, who said they expect a full reopening by mid-2023. A survey by Bloomberg News earlier this month showed that most economists see reopening starting in the second quarter of 2023 after China’s annual top political meetings.
The Chinese government has given no public indication on the timing of an exit from the current “zero-Covid” pandemic control policy, although some municipal governments recently eased controls.
Hu projected a major adjustment in China’s pandemic prevention and controls during the annual meetings known as the “Two Sessions,” usually held in March. By the third quarter, China’s economy will be fully reopened with no lockdowns, and global travelers will be allowed to enter the country freely, Hu said Wednesday at an online media briefing.
However, there are still some pressures and challenges to reopening, mainly in consumption and production, Hu said. She projected that China’s gross domestic product will expand about 5% in 2023, compared with 3% in 2022.
China’s economy will be supported by infrastructure investment and high-tech investment in sectors such as semiconductors, new materials, and high-end equipment manufacturing and artificial intelligence, as well as by consumer spending, Hu said.
Infrastructure investment is expected to exceed 1 trillion yuan ($140 billion) next year. Manufacturing investment is expected to increase 5%–7%; consumption to grow by 5%; and real estate investment to decline 5%, Hu said.
The background: Recently the Chinese government has been trying to reduce the impact of its pandemic control policies on people.
China’s cabinet and the National Health Commission issued 20 new guidelines earlier this month aimed at “optimizing” its Covid response, discouraging unnecessary and arbitrary mass testing.
Cities including Beijing and Guangzhou announced easing measures, including lifting community lockdowns and allowing homebound seniors, students taking classes online, people working from home, and others who do not need to leave their residences to be exempt from daily testing.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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