2022-10-08-KPMG_China-中国経済モニター2022年第3四半期_27页_1mb

Key Findings of China Economic Monitor's Fourth Quarter 2022 Analysis

GDP Growth

• GDP grew by 0.4% year-on-year in the fourth quarter, the slowest growth since the pandemic began but slightly better than the deep contraction in early 2022. Omicron variant disruptions were a major factor, with industrial and manufacturing sectors showing resilience but overall economic activity struggling.

Government Measures

• To stimulate growth, the central government introduced 51 measures including additional tax cuts, increased local government bond issuance for infrastructure, loan support for small businesses, and incentives for automotive purchases. These policies aimed to counteract the pandemic's impact and boost investment.

Economic Activities

• Economic indicators improved significantly after the March low. Industrial production rose by 1.7% year-on-year, while retail sales saw a 12.9% increase, boosted partly by auto sales. However, consumption remained weak due to pandemic restrictions and low consumer confidence, with youth unemployment reaching record highs.

Exports

• Export growth outperformed expectations, contributing significantly to GDP. High-tech products like new energy equipment and semiconductors drove the increase, adding resilience to the economy amid global uncertainties.

Real Estate Market

• The real estate sector remains challenging, with declining investments in construction and property sales. Local governments are easing policies, such as lowering mortgage rates, to stabilize markets, but the central bank's cautious stance suggests further support could be needed to avoid bubbles.

Monetary Policy

• The People's Bank of China maintained an accommodative policy, lowering the reserve requirement ratio and lending rates to support economic growth. This contrasts with tightening in advanced economies but aligns with China's focus on avoiding recession.

Domestic Consumption

• Consumer spending declined, with retail sales dropping by 0.8% year-on-year in the fourth quarter. Income uncertainties and low sentiment kept consumption subdued, though government policies, such as consumption tax reductions, aim to stimulate demand in the second half.

Infrastructure Investment

• Infrastructure investment accelerated, supported by the issuance of local government bonds totaling over 3.6 trillion yuan in 2022, with projects in hydropower and transportation leading growth.

Inflation and Fiscal Challenges

• Inflation pressure is relatively low, with June consumer prices rising by 1.9% year-on-year. However, risks are increasing for the second half due to rising food prices. Fiscal revenue faced headwinds from large tax refunds and reduced land sales, impacting local governments' ability to fund stimulus measures.

Global Economic Outlook

• The global economy is weakening due to inflation, monetary tightening, and geopolitical risks, which could affect China's export-led growth. Emerging markets face slower growth compared to advanced economies.

Regional Economy: Hong Kong

• Hong Kong's economy showed gradual improvement in the fourth quarter, with GDP growth stabilizing, but challenges remain from higher interest rates and global slowdown.

Inflation and Consumer Prices

• Consumer price inflation is low at around 0.9% year-on-year, but rising food prices (e.g., pork) and increased consumer spending could heighten inflation risks in the second half.

Other Developments

• Special attention was given to the digital yuan pilot programs and the introduction of new policies to ensure stable employment and income distribution, particularly for graduates and small businesses.

Note: Data and statistics throughout reflect 2022 trends and are based on the report's analyses.