China's economy is examined differently than it was heading into the pandemic

December 23, 2022: The Chinese economy of 2023 will look different from the Chinese economy of 2019.

Real estate has declined under Beijing’s crackdown. Exports have tapered off following an increase. Chinese e-commerce firm JD.com this year replaced Huawei, reached by U.S. restrictions, as the biggest non-state-owned enterprise in China by earnings.

In the previous month, Beijing suddenly ceased many lockdown measures and Covid, which tests requirements that had weighed on economic growth in the previous 18 months. Analysts warn of a bumpy road to complete reopening, but they expect China’s economy to bounce back sooner than previously forecast.

The economists stated that the elements underpinning that increase would nearly certainly look different than they did three years ago.

China’s growth model moves from one increase dependent on real estate and the infrastructure to one in which the known digital and green economy play more significant roles, analysts at leading Chinese investment bank CICC stated in their 2023 outlook released last month. They cited the Chinese Communist Party’s 20th National Congress’s emphasis on innovation.

The digital financial category includes communication equipment, information transmission and software. The green economy refers to industries that need to invest in reducing carbon emissions, such as electric power, steel and chemicals.

Over the coming five years, cumulative investment into the digital economy is anticipated to grow over sevenfold to reach 77.9 trillion yuan, according to CICC is estimating.

The report said that surpasses expected cumulative investment into real estate, traditional blueprint or the green economy, making digital the largest of the four categories.

In 2022, real estate was the significant category by investment, the report said. But the CICC analysts noted that this year, buying into real estate fell by 22% from the previous year, while the digital and green sectors increased by almost 24% and 14%, respectively.

Beijing cracked down on developers’ increased reliance on debt in 2020, contributing to defaults and decreased housing sales and investment. Authorities this year are easing many of those economic restrictions.