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A recent survey conducted by the Global Times Research Center with 405 mid and senior-level executives from domestic and overseas companies showed that more than half of the respondents are either very or relatively confident of China’s economic recovery in the next three years, higher than their confidence in Asian and global markets, reflecting the buoyed sentiment among global businesses as Chinese economy rebounds at a faster-than-expected speed following optimization of COVID measures.
The survey also offers a vivid glimpse into how the business community views challenges hanging over the Chinese and global economy, with trade protectionism being a major trigger of worries for company executives.
The respondents came from a total of 18 industries ranging from IT, tourism to medical and aviation; 35 of the respondents are top directors of their companies, while 90 are senior management staff.
Confidence in economy
A closer look at detailed data in the survey shows that businesses’ confidence in prospects of Chinese economy is very solid, as their responses to several questions about their outlook on Chinese economy all point toward a relatively high level of optimism.
To sum up, the surveyed companies believe China will stand out among Asian economies in terms of economic recovery, and that the Asian economy will recover at a faster speed than the whole world.
About 57 percent of the executives said they are “very” or “relatively” confident of China’s economic recovery in the next three years. Among the foreign company executives who have been surveyed, about 49 percent shared this viewpoint.
In comparison, about 41 percent of the overall respondents are very or relatively confident of Asian economic recovery, while only 27 percent expressed such confidence when it comes to global recovery prospects in the next three years.
In the long run, the respondents’ outlook about China’s economic prospects also outweighs their expectations for the global economic future. According to the survey, about 25 percent of the respondents think that China’s economy will develop fast in the next five years, while only 5.7 percent of them share the same view for the global economy.
One thing worth noticing is that the survey was the survey was conducted from December 12, 2022 to January 9, after the Chinese government optimized its coronavirus management measures and when COVID infections were sweeping across certain regions in the country. It further testifies that the businesses’ confidence in domestic economy is unshaken by short-term fluctuations.
“Although some of China’s major economic indicators have dropped in the past period, we believe that the fundamentals for Chinese economy’s long-term stabilization and improvement have not changed, and the characteristics of Chinese market being strongly resilient and having great potential have never changed either,” Chen Changyao, General Manager of Qatar Airways North Asia, told the Global Times.
Chen said the global aviation and tourism industry “always expects” recovery of the Chinese market.
China’s ensuing economic data in January also confirmed a trend of economic rebound like what the executives have anticipated. Both China’s manufacturing and non-manufacturing purchasing managers’ index (PMI) bounced back into the expansion territory in January for the first time since last September, signaling recovery in the production and service sectors. The recent Spring Festival holidays also witnessed a strong rebound in consumption fields ranging from tourism to the movie industry.
Jia Guolong, chairman of Chinese catering giant Xibei Catering Group, told the Global Times that he thought the coronavirus uncertainties have gradually ended, and the next phase will further test companies’ cash flow, while a recovery on the market can be expected to return gradually.
“In our eyes, industries that have been affected by the coronavirus, including dining, have seen the twilight. The market will continue to recover and will surely usher in new development opportunities,” Jia said.
The survey showed that around 38 percent of the respondents forecast that China’s GDP will grow between 3-5 percent, while 32 percent think the growth will fall between 5-7 percent. On average, their forecast for China’s GDP in 2023 is 4.64 percent.
The IMF on Monday projected China’s economy will grow by 5.2 percent in 2023, 0.8 percentage points higher than its forecast last October. It forecast that global economy will grow by 2.9 percent this year.
On the other hand, the survey’s statistics also showed China’s economic resilience in the year of 2022 despite coronavirus impact. About 36 percent of the respondents said that their companies’ revenue in 2022 was better than the previous year, while nearly one third said they earned a higher salary.
Worries about protectionism
On the other hand, both the respondents and experts still hold cautious views about the world’s economic development trends in 2023, citing challenges like high raw material costs and instable supply chains.
Chen Jia, an independent macroeconomic analyst, said although the US’ economic indicators in the fourth quarter are better than expectations, the risks of an economic hard landing still exist for reasons like that the negative impact of shrinking US private fixed-assets investment on US economy is still increasing.
He also noted that Europe has so far not walked out of stagnation risks, while South Korea and Japan are having strong currency fluctuations.
In particular, the business cycle has expressed worries over the potential influence of protectionism on the global economy. A total of 165, or 40.7 percent of the respondents think that the global spread of trade protectionism will restrict global economic development in 2023. And more than half of them think trade protectionism will form great constraints on global economic recovery, while 26.7 percent think that the trend will severely harm the global economy.
Besides, about 44 percent of the respondents think that the US’ financial regulation/monetary policy and trend to politicize economic/trade cooperation will also restrict global economic development this year.
The US has repeatedly taken action to strangle the development of Chinese companies in recent years. In a latest move, the US administration has reportedly stopped approving licenses for US companies to export most items to China’s Huawei.
According to Chen Jia, the US’ moves such as decoupling action and sanctions against China have brought disaster to the US and the world economy. “The US needs ‘friends’ to help it avoid a possible economic hard landing this year. It should reexamine and adjust its position as soon as possible to stop economic losses,” he said.
The surveyed businesses also saw some challenges for China’s economic recovery, with global economic slump and lingering epidemic being considered the two biggest lurking risks for China in 2023.
Chen Changyao said that phased outbreaks of the coronavirus epidemic still have a (negative) impact on production and life, which is also a major test for airline companies’ capacity guarantee, operation, service abilities and resilience to pressure.
Fan Dongsheng, general manager of the China Tourism Group Hotel Holding Co, also told the Global Times that financial risk is still the major risk that companies need to guard against for some time to come, and it will be the top priority for companies to prevent blind capital expansion, effectively use investment tools to drive company development, and reasonably control the assets-liability ratio.