China boosts market confidence for 2023 economic recovery

Crew members celebrate the start of full operations on the high-speed railway linking Yinchuan, Northwest China’s Ningxia Hui Autonomous Region with Lanzhou, Northwest China’s Gansu Province on December 29, 2022. With a designed speed of 250 kilometers per hour, the new line will cut the travel time between the two cities by over five hours. Photo: cnsphoto

In the first holiday season after China adjusted its coronavirus management measures, the country ushered in a bulge of tourism demands across different regions, as the Chinese people unleash their pent-up demands for travel in what experts said makes a good start for economic rebound in 2023.

At multiple tourist destinations in China, the number of tourists has seen a sharp rebound on a yearly basis. On the first day of 2023, more than 10,000 tourists climbed the Huangshan Mountain in East China’s Anhui Province, up nearly 58 percent compared with the first day of 2022. Many tourists posed in front of the mountain’s famous “Greeting Pine” to celebrate the first sunrise of the new year.

Such scenes are everywhere in China in the three-day New Year’s Day holidays. In Beijing’s renowned tourist site Forbidden City, travel reservations had hit the upper limit of 30,000 people on Sunday, the second day of the holidays, according to a CCTV report.

In Shanghai, the familiar scene of families elbowing their way through crowds on the Nanjing Road and near the Bund area to celebrate the new year is back again. On the New Year’s Eve, the total passenger flow of the Bund’s waterfront area was 308,000, with an instantaneous peak of 64,000 people, nearly double that of December 31, 2021 and amounting to about 70 percent of the New Year’s Eve in 2019, a report by portal noted.

In the eyes of industrial practitioners and experts, such scenarios are not surprising, as they reflect the resilience and flexibility of China’s economy, the consumption sector in particular.

“The bottleneck of China’s offline consumption caused by repeated coronavirus strikes in the past three years is being run over, and chances are great that China’s consumption sector will usher in an inflection point of comprehensive recovery in the near future,” Chen Jia, an independent research fellow on international strategy, told the Global Times on Monday.

Economic mainstay
Experts also noted that the recent tourism rebound makes a good start for China’s economy in 2023, as it signals the strong growth momentum of China’s consumption sector, which is set to become a primary engine of this year’s economic performance.Tian Yun, a veteran economist and former vice director of the Beijing Economic Operation Association, told the Global Times on Monday that the recent consumption recovery has been “much earlier” than market expectations.

“The market used to think that China needs about one full quarter to adjust its economy, but now the situation seems to far exceed what people had expected,” he said.

This in turn proves the fact that China’s consumption potentials are only restricted by external environment, instead of being hurt fundamentally during the past several years, he said.

On the other hand, as other pillars of economic growth are burdened by uncertain factors such as US’ monetary policies and local government debt pressure, consumption is believed to be the major momentum for this year’s economic growth.

“The strength of China’s consumption rebound decides the height of China’s economic performance this year. It [the consumption sector] is going to be the No.1 force that drives up the economy this year, likely accounting for more than 70 percent of total GDP,” Tian said.

In a larger sense, experts also stressed that China’s consumption sector will play a pivotal role in driving up the global economy, as at a time when many other countries are presenting gloomy economic prospects, the recovery of Chinese demands will make all the difference for overseas consumption sector as well.

“Whether in terms of driving up confidence, boosting connectivity between global industrial chains and consumption market or stabilizing global economy, the importance of China’s consumption sector for the global economy is without rival,” Chen said.

He cited the example of tourism market, saying that China’s optimizing of cross-border travel policies might help the global tourism industry recover to pre-COVID levels in 2023.

Tian also noted that if China’s consumption sector could grow by 5 or 6 percent in the first quarter of 2023, that could make the world more confident of China’s whole-year economic performance, which will in turn affect global capital flow direction to a relatively large extent.

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