Expert pins growth hopes on real estate, consumption

Real estate recovery is a key factor to China's economic rebound this year and should be closely monitored while growth driven by foreign trade, particularly exports, is likely to dim, economists said.

Yao Yang, dean of the National School of Development at Peking University, said in a recent seminar that he expects China's 2023 GDP to achieve growth between 5.3 percent and 5.8 percent, with consumption playing a notable role.

Yao said the growth target of around 5 percent this year in the recently unveiled Government Work Report leaves greater room for macro policy maneuvers, making the goal more attainable.

"There are many current conditions that are conducive to a robust economic recovery. For instance, the unleashing of pent-up demand will actively drive consumption recovery. High-level household savings accumulated during the years under COVID-19 and the recent recovery in consumption will all contribute to an active growth rebound," he said.

How well the real estate sector will recover is a key variable for this year's growth, Yao said, given that the sector remained largely stagnant last year with declining investment.

"It's critically important for the sector to grow in a stable manner and hold up the downward pressure from last year," Yao said, "The real estate sector, as one of China's pillar industries, plays a critical role in expanding consumption as it also catalyzes consumption in home decorating and refurbishing."

"The good thing is that so far, transactions of secondhand homes have picked up and housing prices in several cities have recovered. Homebuyers are regaining confidence," he said.

Regarding the ongoing regional geopolitical tensions and the closely watched development of Sino-US ties in trade and economy, Yao said competition between the two largest world economies "does not have to be a zero-sum game".

With China so deeply intertwined with the world economy, Yao said since the COVID-19 outbreak, China has played an indispensable role in world supply. He said this year, growth will mainly be underpinned by investment and consumption. Foreign trade will play a relatively smaller role compared with previous years as the world economy turns sluggish.

Data from the National Bureau of Statistics showed that China's value-added industrial output, an important economic indicator, went up by 2.4 percent year-on-year in the first two months. Growth rose by 1.1 percentage points from the level in December 2022 and the two-year average growth stood at 4.9 percent, pointing to a recovery in industrial activity.