Global Economic Outlook 2023: China Edition

Current Property Market Downtrend Redirects the Economic Outlook in the Coming Decade 

While we expect China’s long-term growth to continue outpacing growth in advanced economies, risks are tilted to the downside. Domestically, the country’s property downturn will not only affect industrial activity, but also erode households’ wealth levels and, therefore, exacerbate downward pressures on domestic demand. Externally, the rising tensions between Western nations and China could severely damage the growth outlook for China’s high-tech sectors. These factors will weigh on China’s already falling aggregate rate of return on capital.

Insights for What’s Ahead 

• China’s GDP is forecast to rebound to above 5 percent in 2023, assuming the government relaxes its “dynamic zero-COVID” strategy next year. Industrial production growth will slow down in 2023 as external demand moderates.
• China’s aging population and the slowdown in capital accumulation will lead to further growth deceleration in the coming decade.
• The downturn of the housing sector will likely last for years, affecting China’s medium- to long-term growth through several fundamental channels.
• Investment growth in manufacturing will rally in industries where businesses consolidate as well as those with strong state support.
• While the energy crunch in the past two years has resulted in increasing reliance on coal, the government is not retracting its long-term decarbonization plans.

For the full 10-year outlook with risks, and deeper insights for what’s ahead, click the "Download Research Report" button below.  

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