China’s economy is projected to grow by around 5.1% in 2023, according to the Blue Book of China’s Economy: Analysis and Forecast of China’s Economic Situation (2023) released at a webinar on China’s economic situation on Dec. 13.

The Blue Book is an important research outcome produced by the Innovation Project of the Chinese Academy of Social Sciences (CASS). According to the book, in 2023, on the one hand, global economic growth will slow down significantly, which will put great pressure on China’s foreign trade and exports; on the other hand, due to the optimization of China’s epidemic prevention and control measures, domestic consumption will be substantially boosted. In addition, considering the base effect of relatively lower GDP growth in 2022, and the hysteresis and scarring effects of COVID in the country, China’s economy has shown clear signs of recovery, heralding overall improvements in economic performance.

Xie Fuzhan, former CASS president and editor-in-chief of the Blue Book, pointed out at the webinar that in 2022, the COVID-19 pandemic and the conflict between Russia and Ukraine have led to accelerated evolution of the world’s political and economic pattern, soaring global inflation, and several interest rate hikes by the US Federal Reserve. Global economic growth prospects have weakened amid increasing uncertainties, and China’s domestic economy has been under multifold pressures.

In the face of complex and grim international and domestic situations, the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping at its core has been adhering to its approach of seeking progress while maintaining stability, and scientifically coordinated epidemic prevention and control with economic and social development, thus achieving generally stable economic operation, Xie said.

“At the same time, we should also be soberly aware that China’s current economic operation still faces severe challenges, particularly unsatisfactory economic growth, mounting employment pressure, insufficient effective demand, and accumulated risks in certain areas,” Xie said.

He called for efforts to thoroughly implement the spirit of the 20th CPC National Congress, pursuing high-quality development as the first and foremost task of building China into a modern socialist country in all respects.

In his keynote speech entitled “China’s economy is about to return to normal,” Cai Fang, former CASS vice president and chief expert of the National High-End Think Tank at CASS, noted that short-term shocks are often followed by changes in long-term trends. As such, when the economy is expected to return to normal, it is necessary to examine the changes that have taken place in the growth environment. Only by understanding and following the trends can we turn crisis into opportunity, Cai said.

One notable change is that China’s population is likely to peak earlier than expected, Cai continued. Following the peak and subsequent decline, the working-age population will decrease at an accelerated rate, doubling the effect of reducing potential growth rates.

Cai pinpointed the normalization of demand-side constraints as a second change. International experience shows that negative demographic growth is usually accompanied by total consumption exceeding total savings, and the turning point of the decline in residents’ consumption rates coincides with when a country enters an “aging society” or “moderate aging” phase. At present, China’s consumption rate remains lower than the world average, but it can make use of the convergence potential to overtake the average. Cai concluded that in the process of the economy’s return to normal, “creative destruction” should be properly used as an opportunity to create a new competitive environment with new growth momentum.

The webinar was co-hosted by the Institute of Quantitative and Technological Economics at CASS and the Social Sciences Academic Press (China) under CASS.