China poised for strong recovery in 2023, says Morgan Stanley economist

NEW YORK -- China's economy is expected to deliver a strong recovery in 2023, buoyed by the country's optimized epidemic response and effective pro-growth policies, an economist at Morgan Stanley has said.

Mobility indicators across the country, such as intracity traffic and subway ridership, "have already rebounded meaningfully in early 2023," Chetan Ahya, chief Asia economist at Morgan Stanley, told Xinhua recently via email.

"We think this will help support a higher level of economic activity from an earlier starting point, supporting GDP growth throughout the year," he said.

In a research note released last week, Morgan Stanley raised its outlook for China's GDP growth in 2023 from 5.4 percent to 5.7 percent, predicting that a rebound in activity will come earlier and be sharper than expected.

The rapid rebound in mobility and the alignment of COVID-19 management, economic and regulatory policy to promote growth are two major reasons for the upward revision of the forecast, said Ahya.

He said that China has pledged to synergize its fiscal and monetary policies with its COVID-19 response shift to facilitate growth recovery, adding that "regulatory policy has also turned more conducive to anchoring market expectations."

Moreover, the annual Central Economic Work Conference affirmed commensurate support for both state-owned and private enterprises, continued the Morgan Stanley economist.

"This backdrop should support both a stronger policy pass-through and private sector confidence, allowing a strong growth recovery to take hold in 2023," Ahya noted.

He said that a comeback in private consumption, especially services consumption, will be a crucial driver for growth.

The economist expected China's real household consumption growth to be lifted to 8.5 percent in 2023 and an improvement in investment, including the property sector, with policy support.

Ahya also said that a sound recovery of the world's second-largest economy could provide a timely boost to the global economy.

"China's counter-trend recovery should provide an uplift to aggregate demand around the world, with the strongest positive spillover effects to the rest of Asia and Europe," said Ahya.