Japanese businesses pessimistic about China's economy

More than 1,000 Japanese companies in China believe the economy will either get worse or not improve this year.

A January 15 survey by the Japan Chamber of Commerce and Industry in China found that Japanese companies in China expect the outlook for the world’s second-largest economy to remain gloomy this year. About 75% of the 1,700 companies surveyed said China’s economy will worsen or remain unchanged this year.

China is now Japan's largest trading partner and a top investment destination for Japanese companies.

When asked if they planned to not invest or reduce investment in China in 2023 compared to the previous year, 48% cited an uncertain economic outlook and weak demand. Companies also worry about China's regulations on national security and cross-border data.

Still, half of the companies surveyed said China was among their top three most important markets globally this year, with most expecting improvements in the business environment, such as easing visa requirements and lowering labor costs.

China is due to release GDP figures for the fourth quarter and the full year of 2023 this week. An AFP survey suggests the country may have grown by just 5.2% last year, its lowest since 1990, excluding the Covid-19 period. But the figure would still meet the growth target China set at the beginning of 2023 of around 5%.

China’s economy is still facing many challenges as it reopens after the pandemic. Its exports fell last year for the first time in seven years, due to weak external demand. Meanwhile, sluggish domestic demand has pushed the economy into deflation for three consecutive months. The real estate crisis also shows little sign of improving.

This year, the World Bank (WB) forecasts China's growth to slow to 4.5%. Economists in the AFP survey gave the figure of 4.7%.

Ha Thu (according to AFP, Reuters)

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