{"id":6583,"date":"2023-11-14T16:14:03","date_gmt":"2023-11-14T21:14:03","guid":{"rendered":"https:\/\/arc-group.com\/report\/china-economic-update-report-q3-2023\/"},"modified":"2025-03-18T06:08:47","modified_gmt":"2025-03-18T11:08:47","slug":"china-economic-update-report-q3-2023","status":"publish","type":"report","link":"https:\/\/arc-group.com\/report\/china-economic-update-report-q3-2023\/","title":{"rendered":"China Economic Update Report, Q3 2023"},"content":{"rendered":"
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China\u2019s GDP grows with 4.9% (YoY) in Q3 2023, surpassing the 4.4% forecasted growth<\/h3>\n

In the third quarter of 2023, China\u2019s GDP grew 4.9% year-on-year, slowing from 6.3% growth in the previous quarter. However, on a quarter basis, GDP grew 1.3% in Q3, a slight acceleration from the revised 0.5% quarter growth registered in Q2. Q3 data indicates that the full-year growth target of 2023 could possibly be achieved in China.<\/h4>\n

According to data from the Chinese National Bureau of Statistics, China\u2019s economy grew with 4.9% in Q3 slightly exceeding analysts\u2019 forecasted growth of 4.4%. This contributes to the forecast that China will likely achieve or potentially exceed Beijing\u2019s full-year target of around 5% economic growth in 2023. The 2023 growth target can be achieved if Q4 growth exceeds 4.4%.<\/p>\n

The positive outlook from the economic data in Q3 2023 has led international banks to update their 2023 growth outlooks slightly increasing forecasts. The better-than-anticipated data also makes it less likely for the government in China to launch stimulus in Q4, since the overall growth target of 2023 is set to be achieved.<\/p>\n

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Decline in trade since May follows shortfall in global demand<\/h3>\n

In September 2023, the total value of exports declined by 6.2% YoY. China\u2019s imports also decreased by 6.2% compared to 2022.<\/h4>\n

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China\u2019s export values in USD terms have been lower than 2022\u2019s values for every month this year since May. The decline in trade is mainly due to the shortfall in global demand for Chinese goods and services.<\/p>\n

Trade with the US (China\u2019s largest single-country trading partner) has declined significantly for the first three quarters of the year, with exports falling by 16.4% and imports falling by 6%. This has contributed to the members of the Association of Southeast Asian Nations (ASEAN) recently becoming China\u2019s largest export market, overtaking the US and Europe.<\/p>\n

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ASEAN is China\u2019s largest Export Market overtaking the US and Europe<\/h3>\n

Despite the US still being China\u2019s largest trading partner as a single country, the members of the Association of Southeast Asian Nations (ASEAN) have recently overtaken both the US and Europe in becoming China\u2019s largest export market.<\/h4>\n

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The shift is a result of steep drops in exports of Chinese goods to the US and Europe, in combination with the emerging effects of the free trade agreement, Regional Comprehensive Economic Partnership (RCEP), among the Asia-Pacific nations.<\/p>\n

Demand for Chinese goods in the US and Europe has decreased throughout the year. This is primarily due to weaker economic growth in these regions where the Federal Reserve and central banks in Europe began raising interest rates in 2022 to cool inflation. Additionally, geopolitical tensions between China and the US have encouraged international firms to move investments out of China and into new regions, further decreasing demand for Chinese exports.<\/p>\n

Effecting the growing trend of trade between China and ASEAN is the RCEP which came into effect in January 2022. The RCEP is the first free trade agreement among the largest economies in Asia and is effective between the ten members states of ASEAN, Australia, China, Japan, New Zealand, and Republic of Korea.<\/p>\n

There is hope that the RCEP resulting in stronger linkage between Southeast Asia and China will contribute to stabilising global trade during times when demand in the West is weak. This situation is changing where products are made, as parts once made entirely in China are now increasingly being put together in Southeast Asia before being shipped worldwide. As a result, the trade route between the ASEAN countries and China has become crucial for international trade. The result is one of the key trade corridors of the world becoming the one between ASEAN and mainland China.<\/p>\n

Southeast Asia is rising as an attractive location for businesses because of its trade deals and affordable workforce, offering a competitive alternative to sourcing exclusively from China. With the RCEP, ASEAN could strengthen its role as a key part of global trade, spreading out global production and potentially resulting in a stronger, more varied system for global business. This new pattern is reshaping economic power in Asia and suggests a subtle redesign of the world\u2019s economic systems, focusing on flexibility and variety.<\/p>\n

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The Downturn in China\u2019s Property Market<\/h3>\n

China\u2019s property market, comprising nearly 25% of China\u2019s economic output, is causing a real headache for those in charge of keeping the economy growing. In the first nine months of 2023, investments into property fell by 9.1% from the year before.<\/h4>\n

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Even though policymakers have initiated several stimuli to boost the property market, these efforts haven\u2019t been enough to bolster confidence and revive activity within the market. Despite hope from certain signs of recovery in the beginning of 2023, property sales by floor area fell 19.77% YoY in September. Fixed-asset investment by private firms fell 0.6% in January-September YoY, which highlights the weak private sector confidence. The industry started struggling in 2021 and hasn\u2019t recovered which indicates that China\u2019s approach of keeping the economy strong by focusing on real estate may not be a sustainable future strategy.<\/p>\n

This slowdown in the property market isn\u2019t an isolated issue; it affects other areas of business such as construction, manufacturing, and banks that deal with property loans. It also has large ripple effects on countries and businesses globally. How China deals with these property market problems will be important not just for its own future growth, but for the rest of the world\u2019s economy as well.<\/p>\n

About this report<\/h2>\n

This report was compiled with contributions from the team of business experts across ARC Group\u2019s global offices.<\/p>\n

ARC Group is an advisory firm specialised in supporting western companies operating in Asia and beyond. Our mission is to bridge the gap between global business ecosystems and key markets worldwide. Through our Management Consulting division, we provide services within corporate strategy<\/a><\/span><\/span>, business transformation<\/a><\/span><\/span>, operations<\/a><\/span><\/span>, sustainability<\/a><\/span><\/span>, growth, sales & marketing<\/a><\/span><\/span>, and digital & AI solutions<\/span><\/a><\/span>. We work across a wide range of industries, including automotive & mobility<\/a><\/span><\/span>, energy & environment<\/a><\/span><\/span>, consumer goods & retail<\/a><\/span><\/span>, food & beverage<\/a><\/span><\/span>, technology, media & telecom<\/a><\/span><\/span>, advanced industry & materials<\/a><\/span><\/span>, financial services<\/a><\/span><\/span>, and healthcare, medtech & biotech<\/a><\/span><\/span>.<\/p>\n

If you are interested in exploring how we can support your business, reach out through our contact page<\/a><\/span><\/span>, or leave your email below for a representative to get in touch directly:<\/p>\n

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