Page 9 - 2023 White Paper on the Business Environment in China
P. 9
The American Chamber of Commerce in South China
China’s trade surplus swelled to a record inability to bring their expatriate personnel into
US$877.6 billion in 2022 despite weakening US China during the zero-Covid period.
and European demand and COVID-19 control
measures; FDI into the Chinese mainland, in actual China’s economy will still face many grim
use, expanded 8% year-on-year to US$189.13 challenges. Over the last four decades, China
billion. As for international organizations’ emerged as an economic powerhouse and the
expectations for China’s economic growth in world’s factory floor. The country’s evolution from
2023, most revised China’s growth outlook higher widespread poverty to the world’s second-largest
for 2023: IMF from 4.4% to 5.2%; World Bank: economy led to an increase in life expectancy that
4.5%; Goldman Sachs from 4.5% to 5.2%; Morgan contributed to the current population decline
Stanley from 5.2% to 5.4% then to 5.7%. Our 2023 — more people were living longer while fewer
Special Report created a certain snapshot in time babies were being born. That trend has hastened
concerning how our members view the future of another worrying event: the day when China will
foreign businesses in China. not have enough people of working age to fuel its
growth. For the first time in six decades, official
China’s zero tolerance policy ended a few statistics revealed a dip in China’s population.
days after we closed our surveys. Therefore, our It’s not clear if COVID-19 played a significant role
study and research represent the actual views of in deaths exceeding births last year in China,
business and are not tainted by the immediate amid concerns that the government isn’t being
impact of the policy change. We believe the impact transparent about the virus’ true death toll. But
of this policy change on business decisions will population contraction has long been in the cards
not be realized until second half of 2023. At that for China, and further decline is expected in the
time, we plan on surveying the market for any years to come. What is concerning is not so much
changes in business plans. There were several the decline in sheer size, but rather rapid aging
interesting observations this year such as 3% and the socioeconomic challenges of adapting to
more companies (75%) plan to reinvest in China the rapid change in population structure. Experts
in 2023, including 68% American companies. are alarmed that, if trends continue unabated,
Companies are cautious about large investment China—a manufacturing, labor-focused, middle-
in 2023. The number of companies that have each income economy with little in the way of a social
over US$250 million budgeted for re-investment safety net—is headed for a crisis. By 2035, 400
projects in 2023 declines substantially to a five- million people—or over a third of China’s current
year new low of 4%. Ultimately, China’s economy population—are projected to be above the age of
will bottom out and gradually recover from last 60, which would put an unprecedented strain on
year’s negative impacts in the first quarter of 2023 the country’s infrastructure and resources for its
due to a lower number of actual reinvestments elderly. That's caused domestic demographers
in high-volume projects in 2022. But its economy to lament that China will get old before it gets
will pick up quickly in the next three quarters, rich, slowing the economy as revenues drop
serving as a major global growth engine, and and government debt increases due to soaring
remain stable in 2024. It is our opinion that many health and welfare costs. Long-term, UN experts
companies will adjust their investment budgets see China's population shrinking by 109 million
by mid-2023 and reinstate many of the larger by 2050, more than triple the decline of their
projects which have been mothballed due to the previous forecast in 2019.
9
China’s trade surplus swelled to a record inability to bring their expatriate personnel into
US$877.6 billion in 2022 despite weakening US China during the zero-Covid period.
and European demand and COVID-19 control
measures; FDI into the Chinese mainland, in actual China’s economy will still face many grim
use, expanded 8% year-on-year to US$189.13 challenges. Over the last four decades, China
billion. As for international organizations’ emerged as an economic powerhouse and the
expectations for China’s economic growth in world’s factory floor. The country’s evolution from
2023, most revised China’s growth outlook higher widespread poverty to the world’s second-largest
for 2023: IMF from 4.4% to 5.2%; World Bank: economy led to an increase in life expectancy that
4.5%; Goldman Sachs from 4.5% to 5.2%; Morgan contributed to the current population decline
Stanley from 5.2% to 5.4% then to 5.7%. Our 2023 — more people were living longer while fewer
Special Report created a certain snapshot in time babies were being born. That trend has hastened
concerning how our members view the future of another worrying event: the day when China will
foreign businesses in China. not have enough people of working age to fuel its
growth. For the first time in six decades, official
China’s zero tolerance policy ended a few statistics revealed a dip in China’s population.
days after we closed our surveys. Therefore, our It’s not clear if COVID-19 played a significant role
study and research represent the actual views of in deaths exceeding births last year in China,
business and are not tainted by the immediate amid concerns that the government isn’t being
impact of the policy change. We believe the impact transparent about the virus’ true death toll. But
of this policy change on business decisions will population contraction has long been in the cards
not be realized until second half of 2023. At that for China, and further decline is expected in the
time, we plan on surveying the market for any years to come. What is concerning is not so much
changes in business plans. There were several the decline in sheer size, but rather rapid aging
interesting observations this year such as 3% and the socioeconomic challenges of adapting to
more companies (75%) plan to reinvest in China the rapid change in population structure. Experts
in 2023, including 68% American companies. are alarmed that, if trends continue unabated,
Companies are cautious about large investment China—a manufacturing, labor-focused, middle-
in 2023. The number of companies that have each income economy with little in the way of a social
over US$250 million budgeted for re-investment safety net—is headed for a crisis. By 2035, 400
projects in 2023 declines substantially to a five- million people—or over a third of China’s current
year new low of 4%. Ultimately, China’s economy population—are projected to be above the age of
will bottom out and gradually recover from last 60, which would put an unprecedented strain on
year’s negative impacts in the first quarter of 2023 the country’s infrastructure and resources for its
due to a lower number of actual reinvestments elderly. That's caused domestic demographers
in high-volume projects in 2022. But its economy to lament that China will get old before it gets
will pick up quickly in the next three quarters, rich, slowing the economy as revenues drop
serving as a major global growth engine, and and government debt increases due to soaring
remain stable in 2024. It is our opinion that many health and welfare costs. Long-term, UN experts
companies will adjust their investment budgets see China's population shrinking by 109 million
by mid-2023 and reinstate many of the larger by 2050, more than triple the decline of their
projects which have been mothballed due to the previous forecast in 2019.
9
