Type to search

Fitch Raises China Growth Forecast But Warns on Property, Trade

The rating agency predicts a rise in consumption after three years of Covid curbs will see China’s economy grow by 5.0% in 2023

People in China are reluctant to spend because Covid lockdowns have sapped public confidence, leaving the central bank facing a liquidity trap.
People shop at the Sanya International Duty-Free Shopping Complex on Hainan Island in this file photo from late 2020 by Tingshu Wang, Reuters


Rating agency Fitch has upgraded its growth forecast for China this year citing a faster-than-expected recovery after Beijing called an end to its ‘zero-Covid’ regime.

Fitch predicted China’s economy will now grow by 5.0% and not 4.1% with the recovery primarily led by consumption, noting that many high-frequency indicators have recently rebounded though still remain below pre-pandemic norms.

Despite the forecast upgrade, the rating agency expected the economic rebound this year to be less vigorous than that in 2021, when the economy posted GDP growth of 8.4%.

“This reflects in part ongoing weakness in the property market, which showed little evidence of an improvement in sales or housing starts in late 2022, despite a build-up of incremental policy support,” Fitch said in a statement.


Also on AF: Asia Stocks Slip on Tech Earnings Fears, ‘Spy Balloon’ Fallout


In addition, net trade may become a drag on economic growth in 2023, Fitch added, with export demand being depressed by economic slowdowns in the United States and the Europe.

The direction of fiscal policy would remain uncertain ahead of the a parliament meeting in March, Fitch said.

Premier Li Keqiang pledged last week that the government will work to consolidate and expand the economic recovery momentum despite facing difficulties and challenges.

Fitch does not expect aggressive macro-policy easing, and is forecasting a budget deficit of around 7% of GDP in 2023, down from an estimated 8% in 2022.

Policymakers plan to step up support for domestic demand this year but are likely to stop short of splashing out big on direct consumer subsidies, keeping their focus mainly on investment, Reuters previously reported.


  • Reuters with additional editing by Sean O’Meara


Read more:

World Bank Cuts China Growth Forecast For 2022 And 2023

JP Morgan Upgrades China Growth Forecast Despite Covid Surge



Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


AF China Bond