Builders work on a tower crane in Pazhou Artificial Intelligence and Digital Economy Pilot Zone in Guangzhou, South China’s Guangdong Province.Photo: IC

 
More foreign financial institutions have sounded positive notes about the Chinese economy, raising their growth forecasts in the wake of the country’s optimization of coronavirus prevention and control measures. Continued infrastructure spending and a revival in consumption will also help pave the way for economic recovery, analysts said.

Morgan Stanley has revised its outlook for China’s GDP growth in 2023 to 5.4 percent from its previous forecast of 5 percent, media reports said on Wednesday, citing a research note by the investment bank’s chief Asia economist Chetan Ahya.

“We had previously expected a rebound in activity to materialize from late in the second quarter of 2023. Now we are projecting mobility to improve from early March,” read the note.

This upgrade came after Morgan Stanley lifted Chinese stocks to overweight earlier in December, an upgrade from an equal-weight position the brokerage had held since the beginning of 2021.

On the part of Citigroup, the Wall Street investment bank predicted a slowdown in global growth to below 2 percent next year, according to Reuters.

The US economy was forecast to grow 1.9 percent this year before more than halving to 0.7 percent in 2023, according to Citigroup.

China’s efforts to optimize its COVID-19 response were seen as underpinning a 5.6 percent expansion in China’s GDP next year, the brokerage said.
 
In another sign, Deutsche Bank put China’s economic growth at 4.5 percent in 2023, up from a yearly expansion of 3 percent in 2022, the German bank said in a research report sent to the Global Times.

The optimism derives from China's COVID prevention and control measures that would be phased out next year, the research note said, adding that economic growth will rise further to 6.5 percent in 2024.

Meanwhile, the yuan is expected to strengthen to 6.8 to the US dollar by the end of 2023, according to the report, citing Xiong Yi, chief China economist at Deutsche Bank.

The onshore and offshore yuan rates currently hover slightly above the 7 level against the dollar. They dropped beyond 7.3 at their year-to-date lows.

The improved virus response could also stimulate home-buying demand, Xiong wrote, citing a conspicuous easing of housing policies that will support the economic recovery.

As the country's coronavirus containment measures are expected to fade away at a quicker pace in the second half of 2023, a robust rebound in the housing market is on the cards, the economist said.

Behind the prevailing optimism was a consensus on continued commitment to infrastructure investment and rising consumption, experts said.

Citing the country’s recent issuance of three-year special treasury bonds worth 750 billion yuan ($108 billion) to bolster its economy, Wang Yunjin, a senior research fellow with Zhixin Investment Research Institute, told the Global Times that the special bond sale will boost domestic demand, with a focus on propping up key infrastructure projects, manufacturing and the consumer market. 

In a major move to reinvigorate the country’s consumer market, the Central Committee of the Communist Party of China and the State Council on Wednesday unveiled strategic plans to boost domestic demand over the course of 2022-35.