Economists Parse 2023 First Half Economic Data
Jul 22-2023
In the 65th edition of China Economic Observer, a hallmark event of the NSD, five speakers shared their interpretations of China’s latest economic statistics, delved into the challenges for economic development, and predicted economic situations in the second half of 2023 and onward.
Mr. Xu Xianchun, NSD contract research fellow, analyzed the Chinese economy in the first half of 2023 from four perspectives, namely production, demand, income, and price. He said that the economy has picked up steam but still grown at a relatively low rate over the last two years. The tertiary industry has strengthened its pulling effect on economic expansion, while the secondary industry has grown at a speed inferior to that of GDP growth. Consumption has further recovered, investment has seen its growth rate going down, and net export has continued to weaken.
Zhao Bo, NSD Associate Professor of Economics, said that both household consumption and disposable income have seen their shares continuously declining, a result of income inequality which has led to a decrease in per capita consumption and a jump in household savings rate. His analysis also showed that while the urban-rural income gap has narrowed, the income gap among urban households has widened, and the income gap among rural households is even more alarming. He proposed using tax reform, transfer payment, social security and education policy to address income gaps.
Huang Zhuo, NSD Assistant Dean, Fashu Scholar, and Executive Director of Institute of Digital Finance, said that the economic data in the first half of 2023 didn’t measure to market expectations. A bright spot, though, is that digital economy has become an essential driver for stabilizing growth and facilitating transformation. To safeguard the development of digital economy, especially platform enterprises, he advocated further tapping the power of the market, clarifying institutions, rules, and directions, introducing fair competition mechanisms, and establishing a negative list. On the other hand, the government should play its role, for example by using central government budgets to lead investment in digital infrastructure, while building an investor-friendly capital market and guiding funds to support the innovative development of the real economy.
Wu Ge, Chief Economist of Changjiang Securities, said that some Asian emerging economies grew at an accelerating rate in the first quarter of 2023, only to see it turning downward in the second one. It remains unclear whether China can achieve stable and healthy growth after the pandemic, he said. Consumption and demand are still far off from pre-pandemic levels; real estate is weighed down by pressures that are even more severe than the average level over the three pandemic years. He believed that in the short term there is huge demand to improving living conditions, but policy support hasn’t been adjusted in a timely and sufficient manner.
Xu Gao, who is Assistant President and Chief Economist of BOC International and NSD Adjunct Professor, said that job growth hinges on economic expansion in the short term, but withering overall demand has aggravated challenges. Real estate investment has become the biggest foot dragger, seeing its recovery coming to an end after a rebound in the first quarter of 2023. Real estate financing has regressed into contraction mode, he said. Economic development requires new growth points, but traditional growth engines shouldn’t be subjected to man-made blows. He believed that many perceptions and understandings of China’s debt issues and real estate market controls need to be corrected.
