Research Briefing | Dec 22, 2022

Most Chinese cities see higher growth in 2023 despite the challenges

Most Chinese cities see higher growth in 2023 despite the challenges

We expect GDP growth across many of China’s major cities to improve in 2023 following the largely weak performances in 2022. But the near-term outlook remains tentative. Recent announcements regarding the easing of Covid-19 controls bode well for the recovery of cities’ consumer sectors but the global economic slowdown will create challenges for their manufacturing bases. Finance & tech cities will continue to show strength.

What you will learn:

  • As containment measures are gradually dismantled, we would expect to see a boost in the consumer-facing sectors such as retail and hospitality sectors in the country’s major cities in 2023. But some near-term caution in China’s consumer recovery is warranted given the weak consumer sentiment moving into the new year and the potential downside risks to reopening while vaccination rates among the country’s elderly are still low.
  • The outlook for China’s cities is also set against a challenging external backdrop given the general global economic slowdown expected next year. With Chinese exports forecast to contract in 2023, cities with large export-oriented manufacturing centres will feel added pressure.
  • In contrast, we expect some stability in the performance of those major cities with higher exposure to finance and information & communications. These sectors have exhibited robust growth in recent years due to their resilience to lockdown measures and their place among China’s strategic growth sectors.
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