Recently, many foreign institutions have raised their expectations for China's economic growth in 2023. This reporter noticed that the key words most mentioned in the forecast are "rebound" and "upgrade". Based on the bullishness of China's economic recovery, foreign investors have been actively increasing their positions since November 2022.

Entering 2023, both the external environment and the recent release of a series of positive signals at home seem to indicate that China's economy is expected to "come back to life".

Foreign investors are bullish on China's economic growth trend

Goldman Sachs recently raised its forecast for China's economic growth in 2023 from 4.5% to 5.2%, with its research arm believing that the consumer sector is expected to be the highlight of China's economic growth in 2023. Morgan Stanley similarly raised its outlook for China's economy in 2023, predicting that consumption will lead China's economic recovery in 2023, especially in the second half of the year. After a short-term bout of pain as epidemic prevention and control measures are adjusted, travel and life in China will largely return to normal starting in the second quarter of 2023, and GDP growth is expected to return to 5% for the year, much better than the 3% in 2022.

"The investment opportunities in 2023 for China cannot be ignored." In his market outlook, Roddy, director and asset allocation fund manager at UBS Asset Management (Shanghai), suggested that in China, infrastructure investment is the main grip on stable growth this year. As China further optimizes its anti-epidemic and real estate-related policies, fiscal policy is expected to maintain the intensity of fiscal spending, and monetary policy has room and possibility to further intensify, the focus may shift more to economic growth, boosting consumption, investment and market confidence.

Capital has always had a keen sense of smell and always flows to the markets with the most potential and opportunities. Since November 2022, northward capital has returned in a big way, with a cumulative net inflow of 90.20 billion yuan in 2022. Along with the opening of the A-share New Year, the net inflow of northbound funds exceeded 3 billion yuan as of Jan. 4.

China's steady and improving economic trend is also attracting global companies to invest and expand their business in China. According to a recent survey conducted by CCPIT on more than 160 foreign enterprises and foreign business associations in China, 99.4% of the foreign enterprises surveyed are more confident in the prospects of China's economic development in 2023, 98.7% of the foreign enterprises surveyed said they will maintain and expand their investment in China, 89.8% of the foreign enterprises surveyed said they will maintain their industrial chain in China, and 10.2% of the foreign enterprises plan to transfer their foreign industrial chain to China.

A strong rebound is expected to start in the second quarter

Looking ahead to 2023, experts surveyed are generally confident in China's economy, believing that with the adjustment and optimization of anti-epidemic and prevention policies and a series of recent stepped-up economic policies, economic growth is expected to start to rebound strongly from the second quarter of 2023, with consumption and investment playing a more significant role in pulling support to the economy, with annual economic growth likely to be 4.5% to 5.0%.

"In the past year, the world economy suffered an over-expected shock that caught the market by surprise, but after weathering the epidemic 'shockwave,' external certainty for the Chinese economy rises in 2023." Xu Hongcai, deputy director of the Economic Policy Committee of the China Policy Science Research Association, told International Business Daily that China's insistence on reform and opening up, especially its intensive great power diplomacy activities since the 20th Party Congress, further demonstrating China's determination to firmly promote multilateralism and economic globalization and releasing positive signals to the international community, all bode well for the rising external certainty facing the Chinese economy in the future.

From the perspective of China's economy, the Central Economic Work Conference has made a comprehensive and systematic plan for economic work in 2023, and policies in many dimensions, such as fiscal, monetary, industrial, science and technology, social as well as real estate and platform economy, will work together to bring more hope and support for economic recovery in 2023.

Xu Hongcai expects China's economy to rebound from the second quarter, with annual GDP growth likely to reach about 4.7%. On the structural side, foreign demand may fall back, leading to a decline in the contribution of foreign trade to economic growth, which needs to be compensated by investment and consumption in time. Urbanization, industrial upgrading and digital economy, reform and opening-up dividend, silver-haired economy and talent dividend can further tap the potential, and it is worth looking forward to 2023 when China's economy will be on a normal development track.

Experts generally believe that consumption will be an important driving force to lead China's economic recovery in 2023. Wang Jun, chief economist of Huatai Asset, said that with the adjustment and optimization of prevention and control policies and the introduction of the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), consumer demand will be significantly improved. The accumulated "excess savings" and suppressed consumption will be significantly improved, together supporting the obvious repair of consumer demand, which in turn will provide endogenous impetus for economic growth. At the same time, with the improvement of employment and income expectations, some upgraded goods, such as new energy vehicles, smart phones, green smart home appliances, etc., will enter the window of large-scale replacement, and consumer demand will be further released.