New Development Goes Full Steam Ahead

Growing market confidence, supported by a strong economic recovery in China, has led to improved forecasts by international agencies regarding the country's economic growth. For example, the International Monetary Fund raised its 2023 economic growth forecast for China to 5.2 percent from the previous 4.4 percent; Morgan Stanley raised its forecast for China's GDP growth in 2023 from 5.4% to 5.7%. The bright future of the market is supported by various policies and measures of central and local authorities.

However, global inflation, regional volatility, and global uncertainty persist. Chinese President Xi Jinping, general secretary of the Communist Party of China Central Committee, called for efforts to "accelerate the establishment of a new development model of good life, competition and the whole world economy" at the last stage of the meeting. Thunderstorms and strong winds are expected and unexpected. "Develop and maintain progress within yourself." The Chinese domestic market is still the cornerstone of the new development model, first proposed by CPC management at the end of 2020, with a positive interaction between domestic and international economic flows. Xi, a member of the Political Bureau of the 20th CPC Central Committee and chairman of the second group study session, said on Jan. 31 that the new development paradigm will help "ensure the security of the country's development" and "seize the initiative for future development."

Strong comeback

Therefore, Xi stressed the importance of linking domestic demand expansion with supply-side structural reforms to create a higher level of dynamic equilibrium.

Domestic consumption growth is improving on the supply side as the country's economic recovery is in full swing. Supply-side product and service providers have begun to promote new consumer trends prompted by a dynamic market.

The sectors of tourism, retail, catering and some services in recent months have led to a dynamic return to the country's domestic economy. The week-long Spring Festival that ended on Jan. 27 generated nearly 308 million domestic trips, up 23.1 percent from last year, according to the Ministry of Culture and Tourism. The Ministry of Commerce announced that business increased by 6.8% due to the Spring Festival last year. According to official figures, China's box office revenue for films during the festival period was the second largest, totaling about 6.76 billion yuan. This seasonal growth was also reflected in the food market. Online delivery platform Meituan reported a 37 percent increase in Spring Festival special delivery business, with a sales increase of 71.23 percent compared to 2022. Experts confidently predict that this luxury interior will be put to good use until the end of 2023.

The Purchasing Managers' Index (PMI) for China's manufacturing came in at 50.1 percent in January, rebounding after three straight months of contraction. Production is growing all over the country. On January 28, the first working day after the Spring Festival, construction of 136 large facilities began in Xi'an, the capital of northwest China's Shaanxi Province. Covering everything from advanced manufacturing to modern services, Xinhua said, it is expected to produce more than 150 billion yuan annually and also create more than 110,000 jobs. Meanwhile, in the southwestern municipality of Chongqing, 60 or more rotary drilling rigs were put into operation simultaneously at the construction site of a new automobile factory in Chang'an in January. "With an investment of 6.3 billion yuan, the project will reach a production capacity of 280,000 new energy carriers annually," project director Wu Kejie said in an interview with Xinhua. Chongqing's plan to launch 1,123 major projects this year marks an 18.5% increase in total investment over last year.

Elsewhere, the major economic centers of Guangdong, Zhejiang, Shandong and Sichuan have set growth targets in excess of 5 percent for 2023. These new measures, revealed in the report on local government work, are expected to contribute to the qualitative growth of the Chinese economy and help shape models new development.

Strong political support

Central and local policy-making owes such an encouraging pace. China's top priority in 2023 is to increase consumption and expand domestic demand.

The Chinese central bank continues to inject money into the financial system through open market operations to maintain prudent and sufficient liquidity in the banking system. On February 9, the People's Bank of China announced a 453 billion yuan seven-day reverse repo agreement - a process whereby the central bank offers and purchases securities from commercial banks on the understanding that it will sell them back in the future - at an interest rate of 2%.

The Bank will also lead the efforts of financial institutions to expand support for green growth and continue to implement monetary policy tools aimed at reducing carbon emissions, clean and efficient use of coal, and efficient supply.

The Ministry of Commerce recently announced its intention to coordinate national promotional activities to focus on automobiles, home appliances and increase consumption. The ministry will continue to build international consumer centers and continue to focus on business development at the provincial level.

Local governments have introduced a host of new measures to stimulate the economy, from tax breaks to bonuses for capital and entrepreneurial talent. On February 8, the Luohu District of Shenzhen, a manufacturing and technology hub in southern China, unveiled a series of policies aimed at attracting financial institutions, wealth management companies and financing companies. The region will provide settlement subsidies of up to 50 million yuan for new headquarters of banks, insurance companies and securities companies, as well as related asset management and asset management subsidiaries. On the same day, east China's Jiangxi Province announced 28 policies and measures aimed at enhancing market vitality. The province intends to accelerate the construction of 3,558 major facilities this year, reward travel agencies that bring tourists to the province by chartered bus, train or plane, and provide subsidies for some employment programs.

Increasing consumption is high on China's political agenda for 2023. As President Xi said at the last meeting: "We must resolutely implement the outline of the strategic plan to expand domestic demand, build a complete domestic demand system as soon as possible, focus on expanding consumer demand, and support Income, investment demand, reasonable income, principal and debt limits.With financial needs.

Improve the production chain

President Xu urged the country to focus on developing the real economy to achieve economic growth. Take decisive steps to promote new industrialization and rapidly enhance China's manufacturing capacity, product quality, cyberspace and digital development.

Guangdong One Nano Technology Co., Ltd. The spring enrollment of Zhongkai High-Tech Zone in Huizhou has already started. Xinhua said a 279 percent increase in the company's revenue in 2022 and a busy schedule of orders for various nanomaterials during the second quarter of 2023 fueled plans to double the company's workforce in 2023.

Across the country, economic activity is in full swing, upstream and downstream supply chain operations have been strengthened, and market expectations have been raised. The new orders index rose seven percentage points to 50.9 percent, according to the latest release from the Service Industry Research Center of the National Bureau of Statistics and the China Logistics and Purchasing Federation.

The country's outstanding performance is also largely due to the acquisition of Chinese initiatives in digital transformation and innovation in business mode. Another example is Galanz, a home appliance manufacturer based in Foshan. With the expansion of intelligent manufacturing plants and automated assembly lines, as well as the upgrade of management information systems, the company is receiving more foreign trade orders for microwaves, conventional ovens, toasters and dishwashers.

A group of 146 science and technology enterprises and supporting projects in Shanghai's Pudong New Area signed or started construction on February 1st. These projects, with an investment of about 86.7 billion yuan, are in sectors such as biomedicine, artificial intelligence, and integrated circuits. And make cars. Among them, a total investment of 850 million yuan has been allocated to build the global headquarters of SmartSense Technology (Shanghai) Co., Ltd. , a CMOS image sensor chip developer.

Thus, Chinese companies are definitely heeding President Xi's call to "remove the obstacle that several countries have put in the way of China's nuclear technology development."

Sanskar stimulates vitality

Xi stressed the need for further reforms and opening-up to improve the speed and accessibility of domestic trading and its interaction with international markets.

In early February, China unveiled draft rules for expanding the registration-based initial public offering system, an important step toward reforming the world's second-largest stock market and improving the real economy.

The registry-based IPO system was first endorsed by technology company STAR Market in 2019. It expanded to the ChiNext launch platform in 2020 and to the Beijing Stock Exchange in 2021. This will also apply to boards of directors, the China Securities Regulatory Commission said in a statement. The main ones are in Shanghai and Shenzhen, where the shares of major companies in China are registered. The Commission said the core of the IPO reforms was to "give market choice" and make IPOs "more standardized, transparent and predictable".

Experts note that the introduction of the registration system throughout the Chinese stock market contributes to the creation of a single market throughout the country. The system will help companies in the new economy to access financing in the capital markets and enhance the role of capital markets in promoting the qualitative development and structural transformation of the economy.

Meanwhile, great progress has been made in the reform of state-owned enterprises in China, and the main goals of the three-way action plan covering nearly 80,000 enterprises have now been completed. State-owned enterprises play an active role on strategically important industrial fronts in China. More than 70% of the operating income of central state-owned enterprises is related to national security, the continuity of the national economy, and people's livelihood. According to official data, state-owned enterprises are expected to generate operating income of 82.6 trillion yuan in 2022, up 8.3% from the previous year.

The reform has improved corporate governance in state-owned enterprises. About 13,000 subsidiaries of state-controlled state-owned enterprises and 25,000 subsidiaries of local state-owned enterprises have set up boards of directors.

A strong recovery in domestic demand and a deepening of the Chinese economy could boost global economic growth by about one percent in 2023, boosting domestic growth, according to a recent report by Goldman Sachs Group. Meanwhile, the country's market revival is constantly fueling the appetite of foreign investors. German automaker Mercedes-Benz will continue to invest in China. "We will expand our R&D structure and manufacturing chain and accelerate our innovative transition towards electrification, digitalization and carbon neutrality to meet the luxury mobility needs of Chinese customers," said Hubertus Troska, member of the Board of Management of Mercedes-Benz. Group AG is responsible for Greater China. Noting that China is the company's largest sales market and largest production region, Trosca added that China is the center of technological innovation and the center of development of the company's production chain, and plays an important role in its long-term global strategy. "We are confident in the long-term development of the Chinese auto market and our growth potential in the country," he said.

In 2023, “China can play a very important role in driving global growth,” said Hamid Rashid, Global Economy Monitor, Division of Economic Analysis and Policy, United Nations Department of Economic and Social Affairs.

China's booming economy, which should start off well in 2023, is building confidence and providing new incentives at home and abroad.

(based on regulatory report)

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