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1、Ten Macroeconomic Trends in 2023Economic InsightsKPMG ChinaDecember 2022,Chinas economy faced strong headwinds and growth slowed.Four challenges had a particularly significant impacts on the economy:First,the Covid-19 pandemic continued to spread.The highly transmissible Omicron variant triggered mu

2、ltiple resurgences over the past year,which had a significant impact on the economy.With the removal of almost all quarantine measures,the number of new infections surged in December.Second,the real estate market continued to face pressures.In the first 10 months,real estate investment fell by 8.8%y

3、ear-on-year and is expected to see the first annual decline in history,dragging down overall GDP growth by 1.7 percentage points.In addition,sharp decline in land sales also weighed on local governments revenue.Third,the US Federal Reserve(“the Fed”)has raised policy rates rapidly to curb elevated i

4、nflation,while China has adopted easing monetary policies to stimulate growth.The differences in policy stance between China and the United States affected RMB exchange rate and cross-border capital flows.Fourth,rising geopolitical uncertainty and the conflict between Russia and Ukraine have intensi

5、fied supply chain pressure and pushed up global inflation.Meanwhile,the United States has continuously exerted its pressure on Chinas high-tech sector development.Looking forward,we expect Chinas economic policies to remain supportive in 2023,as recovery is still fragile.At the Politburo meeting of

6、the Communist Party of China on 6 December 2022,policymakers pointed out that proactive fiscal policy must be strengthened to improve its effectiveness;prudent monetary policy must be targeted and robust;industrial policies must drive the balance between development and security;technology policies

7、should focus on self-reliance and self-improvement;and social policies must always firmly protect peoples livelihood.Benefiting from a low base and improved macro environment,Chinas GDP is expected to grow 5.2%in 2023,picking up from an estimated growth rate of 3.2%in 2022.In particular,the followin

8、g 10 macro trends are worth watching in 2023:Chinas economic growth rate is expected to accelerate next year,but recovery is still weak.China will exit from its zero-Covid policy.As this occurs,the vaccination rate for the elderly,medical resource preparation,and media guidance are of particular imp

9、ortance.Consumption should improve with relaxed quarantine measures and household savings should help economic recovery.High-tech manufacturing and renewable energy will lead investment growth.Fiscal and monetary policy remain supportive and policy banks are expected to play an important role in fun

10、ding.The property market will likely remain weak,but the drag on overall growth should lessen.Global economic growth is expected to slow,weighing on Chinas exports.The Fed is expected to slow its rate hikes,reducing pressures on RMB exchange rate and capital outflows.Geopolitics remains complex and

11、volatile and companies may need to conduct scenario planning to mitigate risk.Basic research investment is accelerating and national security is continuing to be a key theme for Chinas future development.10 Trends Ten Macroeconomic Trends in 2023Economic Insights2 2022 KPMG Huazhen LLP,a Peoples Rep

12、ublic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private E

13、nglish company limited by guarantee.All rights reserved.Source:Wind,KPMG analysisNote:The dotted line represents KPMG Chinas forecast.Chinas real GDP growth,quarterly,year-on-year,%Fig 1Chinas economic growth rate is expected to accelerate next year,but the recovery is still weak-10-5051015202015201

14、620172018201920202021202220232022 Forecast：3.2%2023 Forecast：5.2%Looking forward,we believe that Chinas economic growth rate is expected to accelerate in 2023.On the domestic front,as the country continues to optimise its pandemic prevention and control policies and strike a balance between economic

15、 and social development,production activities and daily life will normalise,driving the gradual recovery of consumption.Macroeconomic policies will also continue to encourage steady growth.Technological innovation and green transformation will promote manufacturing investments;infrastructure investm

16、ents will ramp up gradually;and the real estate market will have a less negative impact on the economy.On the international front,falling inflation will make the Fed less eager to set higher interest rates,which will ease pressure on Chinas exchange rate and capital markets and allow its financial m

17、arkets to stabilise.In addition,2022s low base will help contribute to higher year-on-year growth next year.We expect Chinas GDP to grow by 5.2%in 2023 compared with 3.2%this year(Figure 1).Ten Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(C

18、hina)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All ri

19、ghts reserved.3Economic InsightsSource:IMF,KPMG AnalysisNote:Chinas GDP growth rate is an estimate by KPMG China.ASEAN-5 includes Indonesia,Malaysia,Philippines,Thailand,Vietnam.Chinas economic growth will accelerate in 2023,but recovery will still be relatively weak.Expected growth of 5.2%will stil

20、l likely be lower than the pre-COVID level of more than 6%.In addition,the country is forecasted to register an average compound economic growth rate of only 4.7%during the four years following the outbreak of COVID-19,which is lower than expected and not brisk enough to deliver a solid recovery.In

21、2023,Chinas economy may face the following challenges:First,shrinking foreign demand due to the global economic slowdown will weigh significantly on the countrys exports;second,as households and enterprises are still cautious with spending,raising their confidence,maintaining growth prospects,and bo

22、osting demand remain urgent tasks;and third,less stringent prevention and control policies may result in a short-term surge of the pandemic.However,we should also note that this expected growth rate of 5.2%will far exceed the global average.In its latest World Economic Outlook report released in Oct

23、ober,the International Monetary Fund(IMF)lowered its forecast for global economic growth in 2023 to 2.7%,and pointed out that countries accounting for approximately one-third of the global economy will experience a recession for at least two consecutive quarters within 2023-2024(Figure 2).Currently,

24、Chinas economy in aggregate exceeds RMB 114 trillion,representing 18%of the global total and making it the second largest economy in the world.An economy of this size achieving a growth rate of 5.2%is no small feat.The report of the 20th National Congress of the Communist Party of China(2022)puts fo

25、rward the countrys goal of basically realising socialist modernisation by 2035,with its per capita GDP reaching the level of moderately developed countries.According to our estimates,in order for per capita GDP to double from 2020 to 2035,China will need to achieve an average annual economic growth

26、rate of about 4.5%for the next decade or so.Against this backdrop,the country will continue to deepen reform and opening up and give full play to the decisive role of the market in resource allocation,so as to strive for modernisation with Chinese characteristics.Real GDP growth forecast for the wor

27、lds major economies,%Fig 2-3.43.12.81.61.73.25.33.26.8-2.30.5111.62.74.95.26.1-4-202468RussiaEuroAreaBrazilUSJapanWorldASEAN-5ChinaIndia2022202310 Trends Ten Macroeconomic Trends in 2023Economic Insights4 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a lim

28、ited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.1 ht

29、tp:/ will exit from its zero-Covid policy.As this occurs,the vaccination rate for the elderly,medical resource preparation,and media guidance are of particular importanceOn 11 November and 7 December 2022,the State Councils Joint Prevention and Control Mechanism Comprehensive Team issued the“Twenty

30、Measures”and“Ten New Measures”respectively to further optimise the countrys pandemic prevention and control efforts.On 26 December 2022,the government announced that China will reopen borders on 8 January 2023.Sun Chunlan,Vice Premier of Chinas State Council,noted at the symposium of the National He

31、alth Commission on 30 November that the Omicron variants pathogenicity has grown weaker;vaccination has covered a wider portion of Chinas population;and the country has become more experienced in pandemic prevention and control.As a result,China is now facing a new situation and new tasks”with respe

32、ct to its COVID-related efforts1.Given how the pandemic has panned out around the world,China may experience waves of infections within a short period of time after its prevention and control measures are relaxed or withdrawn.The winter season has also led to a recent surge in the number of infectio

33、ns here,significantly impacting social and economic activities.We believe that expanding vaccination coverage,improving the accessibility of medical resources,and changing related publicity will be key priorities to ensure a smooth reopening.Ten Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a P

34、eoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a

35、 private English company limited by guarantee.All rights reserved.5Economic Insights2 https:/www.covidvaccine.gov.hk/pdf/death_analysis.pdf3 Notice on Promulgation of the Work Plan for Strengthening COVID-19 Vaccination among the Elderly,National Health Commission of the Peoples Republic of China,No

36、vember 2022,http:/ https:/ Omicron variant has now been spreading since November 2021.Many medical studies have shown that compared with the original virus and the other mutated variants that emerged later,the Omicron variant has a smaller pathogenic potential.Notably,the Omicron variant can still b

37、ring harm to the elderly and highly vulnerable groups with chronic underlying diseases,but to a significantly lower degree after vaccination.According to the latest statistics from Hong Kong SAR,China,even the first dose of the vaccine can deliver a certain level of protection(Figure 3).Among people

38、 over 80 years old who had received one dose of the vaccine,7.15%who contracted COVID-19 died,much fewer than their peers who had not been vaccinated at all(14.67%).For those who received the third,booster dose,the mortality rate dropped further to 1.66%2.In Singapore,more than 90%of the elderly ove

39、r 80 years old have been vaccinated,and their mortality rate has been reduced to 0.51%after receiving at least 3 doses of the vaccine.As of 28 November,among those aged over 80 in China,76.6%had been vaccinated and 65.8%had been fully vaccinated,representing a relatively low vaccination rate compare

40、d with other economies including Japan,Singapore,France,and Italy(Figure 4).The State Councils Joint Prevention and Control Mechanism Comprehensive Team recently issued relevant notices on promoting COVID-19 vaccination among the elderly3.The team highlighted the need to continue to drive full vacci

41、nation and enhance immunisation for people aged 60-79,and for those over 80 years old in particular.C recently reported that the Chinese government has set a target that by the end of January 2023,90%of Chinese residents aged over 80 should have received the first dose of the vaccine,and 90%of eligi

42、ble groups should been fully vaccinated and have received the booster shot4.Source:Centre for Health Protection Department of Health of Hong Kong SAR,KPMG analysisMortality rate of elderly COVID-19 patients in Hong Kong SAR,China,%Fig 31.71%4.52%14.67%0.51%1.52%7.15%3.75%1.66%0%2%4%6%8%10%12%14%16%A

43、ged 60-69Aged 70-79Aged 80 and aboveUnvaccinatedReceived 1 doseReceived 2 dosesReceived 3 dosesTen Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and K

44、PMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.6Economic InsightsIn terms of medical resources,China currently has a total of 64

45、,000 intensive care unit(ICU)beds,second only to the United States,but only 44 beds per million people,far behind advanced economies.It is worth noting that as the Omicron variant is less pathogenic,the number of COVID-19 patients who require ICU treatment in the major economies around the world has

46、 generally fallen from its peak.In addition,this number has been further reduced following the expansion of vaccination coverage(Figure 5).For example,Italy had a severe medical run following the global outbreak of COVID-19 in early 2020,and ICU usage peaked at 69 beds per million people.However,aft

47、er new mainstream strains emerged and vaccination increased,ICU usage decreased steadily.By the end of 2021,97.5%of Italian residents aged over 80 had received their first dose of the vaccine.In 2022,its average ICU usage has dropped to 8.5 beds per million people following a high of 29 at the begin

48、ning of the year,indicating that pressure on medical resources has eased significantly compared to 2020.Source:Our World in Data,local disease control and prevention centres,KPMG analysisNote:as of 28 November.Vaccination rate of people aged 80 and above,%Fig 499.5%96.5%89.3%76.6%74.6%96.9%96.0%87.0

49、%65.8%72.3%0%20%40%60%80%100%120%ItalyJapanFranceChineseMainlandChineseHong KongReceived 1 doseReceived 2 dosesICU beds used per million peopleFig 5020406080100120202020212022ItalyFranceUSJapanSource:Our World in Data,KPMG analysisOriginal virusAlpha variantOmicron variantTen Macroeconomic Trends in

50、 2023 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated wi

51、th KPMG International Limited,a private English company limited by guarantee.All rights reserved.7Economic Insights0204060801001201400102030405060708090100ICU beds used per million peoplePeople aged 80 and above vaccinated with the first dose by early December 2021,%Source:Our World in Data,KPMG ana

52、lysisNote:The red triangle shows Chinas current first-dose vaccination rate for people aged over 80 and its number of ICU beds per million people.Figure 6 further demonstrates the relationship between an increasing vaccination rate of the elderly and peak ICU usage.Over the past year when Omicron wa

53、s the major spreading strain,peak ICU bed usage averaged 35 in the economies where more than 90%of the elderly aged over 80 had received the first dose of the vaccine.Moreover,the economies with a higher vaccination rate had a lower ICU bed usage peak.Obviously,vaccination can effectively prevent se

54、vere symptoms and a run on medical resources,which is the key to fighting the pandemic.At present,the vaccination rate of the elderly in China remains relatively low,and there is a significant gap between Chinese regions in terms of medical resources.The country also falls short in terms of its numb

55、er of medical personnel,especially those for ICUs.For this reason,the“Twenty Measures”set out the requirement to further establish medical resources.Apart from further increasing the vaccination rate of the elderly,the requirements also call on relevant units to prepare hospital beds and ICU beds an

56、d ramp up treatment resources to handle possible waves of COVID-19 infections.In addition,proper publicity will also play a critical role in promoting the relaxation of pandemic prevention and control measures and the resumption of economic activities in 2023.For some time in the past,waves of the p

57、andemic have had a certain negative impact on public sentiment,especially in cases where certain local authorities enforced countermeasures beyond the central governments guidelines or enacted countermeasures in an indiscriminate manner.When pandemic prevention and control enters a new stage,the med

58、ia can play a constructive role by providing proper publicity and guidance.In particular,this can include promoting a scientific public understanding of COVID-19,as well as ensuring that people understand the high transmissibility of the Omicron strain and its impact on human body,so that the public

59、 will neither underestimate the threat posed by the pandemic nor be overly panicked.In addition,the media can play a role to educate society on graded treatment and self-treatment and relay scientific medical advice and drug lists to help people take proper and timely actions according to their own

60、circumstances,while also advocating social inclusion of people who test positive.Relationship between the vaccination rate and peak ICU usage around the world in 2022,%Fig 310 Trends Ten Macroeconomic Trends in 2023Economic Insights8 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG

61、 Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guara

62、ntee.All rights reserved.During the pandemic,the recovery of household consumption in China has been weaker than that of production and exports.From January to October 2022,the countrys total retail sales increased by 0.6%year-on-year,significantly lower than the pre-pandemic level,largely because o

63、f the heavy blow to the demand for offline and services consumption.In the short term,the consumption recovery will still be disrupted by the pandemic as well as prevention and control policies.The broader trend of global consumption recovery suggests that consumption will rebound to some degree aft

64、er pandemic prevention and control measures are released,with a higher growth rate than the rate before the pandemic(Figure 7).As the threat of the pandemic wanes and prevention and control measures are optimised,Chinas consumption,especially consumption of services,are expected to greatly pick up i

65、n 2023.Residents confidence is crucial to the recovery of consumption.Job security and confidence in future income growth are the two main drivers to consumer spending.As such,stabilising employment is Chinas major macro policy goal.Despite the impact of certain unexpected developments in the second

66、 quarter of 2022,the number of newly employed individuals in urban areas reached 10 million in the first three quarters of this year,accounting for 91%of the annual target.Meanwhile,Chinas surveyed urban unemployment rate stood at 5.5%in October,representing a basically stable employment level.At th

67、e same time,Chinese residents income and income expectations are increasing steadily.In the first three quarters of 2022,per capita disposable income increased by 3.2%,which was basically aligned with the GDP growth rate.In the third quarter of 2022,the income perception index of residents increased

68、 by 2.5 percentage points from the previous quarter to 47%,households are expecting better employment opportunities and rising incomes,supporting the recovery of consumption in 2023.Consumption should improve with relaxed quarantine measures and household savings should help economic recoveryGrowth

69、of retail sales in China and the United States,year-on-year,%Fig 7-30-20-10010203040506020152016201720182019202020212022ChinaUSSource:Wind,KPMG analysisTen Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability compa

70、ny in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.9Economic InsightsSource

71、:Wind;KPMG analysisNote:The light blue dotted line is the trendline.010020030040050060020162017201820192020202120220204060801001202016201720182019202020212022 Monthly savings for US households,seasonal adjusted,USD billions Outstanding savings for Chinas households,RMB trillionRMB 7 trillionUSD 2.3

72、trillionHousehold savings are also expected to contribute to the post-pandemic recovery of consumption.For example,the US government launched a large-scale fiscal stimulus when COVID-19 was spreading across the country by issuing large subsidies to households.As a result,its household savings soared

73、 to about USD 2.3 trillion,leading to a strong rebound in consumption(Figure 8).In China,although the government did not directly provide large subsidies to households over the past three years,as the pandemic has provided Chinese residents with limited opportunities to spend,Chinas household saving

74、s deposits have been buoyed as well.According to our calculation,Chinas total savings deposits are currently RMB 7 trillion higher than the trendline would suggest.As the pandemic subsides and Chinese residents become more confident about the future,some of these deposits may be spent,which would he

75、lp boost consumption in the country and serve as a pivotal economic driver next year.However,these increased savings may not be evenly spread among all households,and therefore financial relief for low-income groups and severely affected groups is still very necessary.Household savings the US and Ch

76、inaFig 810 Trends Ten Macroeconomic Trends in 2023Economic Insights10 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KP

77、MG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.High-tech manufacturing and renewable energy will lead investment growthThe manufacturing sector is key to Chinas continued economic transf

78、ormation.The countrys 14th Five-Year Plan calls for ensuring that the manufacturing industry accounts for a certain proportion of Chinas economy.The share of manufacturing value added in its GDP has started to rise again from its low of 26.3%in 2020,reaching 28%at the end of September 2022.Driven by

79、 supportive policies,Chinas manufacturing investment recorded impressive year-on-year growth of 9.7%from January to October 2022,3.9 percentage points higher than the overall investment growth rate.The industry is transforming more quickly toward high-end,green and intelligent manufacturing;and the

80、growth of investments in high-tech manufacturing has been particularly strong,increasing by 23.6%year-on-year during the first 10 months of 2022,which was 17.8 percentage points higher than the overall investment growth rate.Financial institutions have been fine-tuning their total loan amounts and l

81、oan structures by granting a greater proportion of medium-and long-term loans to the manufacturing sector and making more loans to strategic emerging sectors,so as to step up support for the real economy.They have continued to optimise the structure of their loans to manufacturing enterprises,and ha

82、ve reduced overall financing costs.By the end of September 2022,outstanding medium-and long-term loans to the manufacturing sector increased 30.8%year-on-year,20 percentage points higher than the overall growth rate of medium-and long-term loans(Figure 9).Also at the end of September,Chinas central

83、bank established aGrowth rate of outstanding medium-and long-term loans in Chinas financial institutions,%Fig 9051015202530354045202020212022OverallManufacturingSource:Wind;KPMG analysisTen Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China

84、)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights

85、 reserved.11Economic Insightsnew special relending fund of RMB 200 billion for equipment renovation and transformation,aiming to further boost manufacturing investments.In addition,the narrowing PPI-CPI gap will help reduce costs for middle and downstream enterprises in the manufacturing sector and

86、encourage investments from enterprises to expand their production capacity.In terms of research and development(R&D)investment,computer and communication equipment manufacturing enterprises invested as much as RMB 357.8 billion in R&D in 2021,accounting for 21%of the total R&D investment of manufact

87、uring enterprises(Figure 10).In addition,the R&D investment made by high-tech manufacturing enterprises such as medical equipment manufacturers and instrument and apparatus manufacturers exceeded 3%of their revenue,much higher than the manufacturing sectors average of 1.46%,indicating that enterpris

88、es in such areas have attached greater importance to technological innovation.Continuous efforts and investments have contributed to emerging scientific and technological achievements in China,and high-tech manufacturing has become a critical driving force for the countrys industrial transformation

89、and high-quality development.For the foreseeable future,China will continue to drive industrial optimisation and upgrades,and increase support for Specialised,Refinement,Differential,Innovation(SRDI)”enterprises pursuing high-tech manufacturing.Financial institutions will concentrate their support o

90、n high-tech manufacturing and strategic emerging sectors,helping promote the development of advanced manufacturing clusters and improve manufacturers strength in independent innovation.We believe that Chinas industrial policies will continue to accelerate the conversion of its economic drivers,and w

91、ill create a synergy effect with favourable financial policies to boost high-tech manufacturing investments.R&D investments of manufacturing enterprises in 2021,RMB billionsFig 10357.8181.8141.5111.9103.594.290.785.768.362.055.351.80100200300400Information andElectronics and machineryAutomotiveGener

92、al equipmentSpecial equipmentMedicalFerrous metalsChemical productsMetal productsTransportation equipmentMineralRubber and plastic productsSource:National Bureau of Statistics,KPMG analysisInformation and communications technology Ten Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Repu

93、blic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private En

94、glish company limited by guarantee.All rights reserved.12Economic Insights5 The fast-growing hydrogen energy industry,KPMG China,September 2022https:/home.kpmg/cn/zh/home/insights/2022/09/understand-the-hydrogen-energy-industry-in-one-article.htmlMeanwhile,driven by the countrys dual carbon goals,Ch

95、ina CEOs are accelerating the integration of environmental,social and governance(ESG)practices into the companys development strategy,and green transformation is moving into the spotlight.For example,Chinas National Development and Reform Commission and the National Energy Administration jointly iss

96、ued the Medium-and Long-term Plan for the Development of the Hydrogen Energy Industry(2021-2035)in March 2022,which clearly defines hydrogen as an important part of Chinas future national energy system,an important driver for the transition toward green and low-carbon energy,and an important beacon

97、for strategic emerging industries and future-oriented industries.In the first half of 2022,private equity financing in the hydrogen energy sector continued its steep upward trajectory,with a total of 21 financing deals amounting to RMB 1.59 billion concluded.The quantity and amount of the deals in t

98、his space increased by 50%and 137%respectively compared with the same period last year5.As an efficient and low-carbon energy as well as a green and clean raw material,hydrogen can be used across a wide variety of business scenarios in transportation,industry,construction,power and other areas.We ha

99、ve noticed that in general more and more enterprises are shifting their focus toward enhancing sustainability,which may help maintain the rapid growth of investments in new energy sources.10 Trends Ten Macroeconomic Trends in 2023Economic Insights13 2022 KPMG Huazhen LLP,a Peoples Republic of China

100、partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company

101、limited by guarantee.All rights reserved.Fiscal and monetary policy remain supportive and policy banks are expected to play an important role in fundingDuring Chinas Political Bureau meeting on 6 December,officials pointed out that proactive fiscal policy must be strengthened to improve its effectiv

102、eness,and prudent monetary policy must be targeted and robust.Therefore,we expect that China will continue to maintain accommodative stance on its macroeconomic policies next year to drive the economic recovery.On the other hand,we do not expect to see any dramatic changes in monetary policy in 2023

103、 out of consideration for stability and consistency,and ensuring growth will remain the primary goal during the year.The country will maintain reasonably adequate liquidity,and ensure a proper increase in the size of the money supply and social financing.On 25 November 2022,Chinas central bank furth

104、er reduced its required reserve ratio by 0.25 percentage point to release long-term funds of about RMB 500 billion.These funds will help ensure a proper level of liquidity near the end of the year to facilitate economic activity and support financing.In addition,the central bank will continue to enc

105、ourage financial institutions to lower their actual loan interest rates,so as to reduce enterprises overall financing costs and consumers credit costs.These measures will hopefully increase their willingness to invest and spend,and ultimately drive endogenous growth.From a structural perspective,the

106、 central bank has vowed to make good use of existing structural monetary policies and make proper adjustments;and it has also underlined financial support for key areas,and for enterprises severely affected by the pandemic.Proactive fiscal policy was critical to stabilise the economy in 2022.Althoug

107、h the preferential VAT refund and dwindling land sales have led to a decline in fiscal revenue this year,Chinas fiscal expenditure has maintained rapid growth.In addition,local governments have accelerated the issuance of new special bonds this year,which has helped maintain brisk growth in infrastr

108、ucture investment,a crucial lever for stable economic growth.We should also note that China is expected to face greater difficulties in accessing fiscal funds next year.According to data from the National Balance Sheet Research Centre on government debts,by the third quarter of 2022,the Chinese gove

109、rnment leverage ratio was 49.7%,about 3 percentage points up from the end of 2021,of which the leverage ratio of local governments increased 2.5 percentage points,indicating that local governments are under greater pressure to repay debts and interest(Figure 11).However,compared with other economies

110、,China has maintained a relatively low government leverage ratio,so there is room for additional debt to be issued in the future.We expect local governments will continue to issue a certain amount of special bonds in 2023 in order to sustain economic growth.Ten Macroeconomic Trends in 2023 2022 KPMG

111、 Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG Interna

112、tional Limited,a private English company limited by guarantee.All rights reserved.14Economic InsightsChinas government leverage ratio,%Fig 1101020304050602011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Central governmentLocal governmentGovernment leverage ratioSource:Wind;KPMG analysisIn

113、addition to fiscal funds,more policy-based and developmental financial instruments are expected to be used to boost the countrys fiscal expenditure in 2023.In the second half of 2022,Chinas central bank issued such financial instruments through policy banks to support major projects,facilitate the i

114、ssuance of special bonds,and fuel infrastructure construction.The central banks China Monetary Policy Report released in the third quarter mentions that policy and development banks need to be instructed on how to fully utilise policy-based and developmental financial instruments,as well as the addi

115、tional RMB 800 billion credit,to provide effective financial support for infrastructure construction.By mid-November 2022,around RMB 740 billion in funds had been provided through the financial instruments.These financial instruments will facilitate targeted and effective investments and encourage p

116、rivate capital to engage in investments,so as to stabilise the macro economy,achieve more returns,improve employment,and drive consumption.We expect that these financial instruments will continue to play a major role in ramping up effective investments next year.10 Trends Ten Macroeconomic Trends in

117、 2023Economic Insights15 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member

118、firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Source:Wind,KPMG analysisFunding sources of real estate developers from January to October in recent years,RMB trillionFig 12The property market will likely remain weak,but the drag on

119、 overall growth should lessen024681012141618201420152016201720182019202020212022國內貸款自籌資金銷售回款其他DomesticloansSelf-raised fundsSales revenueOthersIn 2022,the real estate market was under ongoing pressure,and liquidity was a key challenge for real estate developers(Figure 12).On one hand,consumer confid

120、ence was weak and house sales slumped,subjecting real estate developers to lower sales income.On the other hand,in the face of stringent regulations,financial institutions slowed down funding for real estate developers,and banks significantly reduced loans to these enterprises.Statistics show that f

121、rom 2011 to 2019,the average growth rate of outstanding loans to the real estate sector reached around 20%.However,with banks reining in real estate loans in recent years,the growth rate dropped to 3.2%by the end of September 2022.Moreover,many real estate enterprises have been defaulting on their b

122、onds,making suchinvestments less appealing.Therefore,the self-raised funds of real estate enterprises(including through bond financing)continued to decline from January to October of 2022,dropping by 14%year-on-year.Obviously,these enterprises are still seriously short of liquidity and are also not

123、as willing to invest,causing relatedindicators such as project kick-offs,construction,and land purchases to plummet.As a result,total new start construction area has declined to the lowest level since 2009,and commercial housing sales area has reached its lowest level since 2015.In addition,real est

124、ate investment in China dropped by 8.8%year-on-year fromJanuary to October 2022.We expect the annual growth rate of real estate investment to decline in 2022 for the first time in history,dragging down overall GDP growth by 1.7 percentage points(Figure 13).Ten Macroeconomic Trends in 2023 2022 KPMG

125、Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG Internat

126、ional Limited,a private English company limited by guarantee.All rights reserved.16Economic Insights0246810121416-20-1001020304019992002200520082011201420172020房地產投資GDP（右軸）The real estate market is important to the Chinese economy,and in order to stabilise the market,China has promulgated many favou

127、rable policies for the sector this year.In terms of demand,many local governments have lifted bans on purchasing houses and lowered mortgage rates,taxes and other charges to meet peoples needs for basic housing and improving demand for quality homes.In terms of supply,the government has put forward

128、a range of policies since November 2022,including the“first arrow”of“Sixteen Measures”to facilitate bank loans to developers,the“second arrow”of supportive measures to facilitate bond financing by developers,and the“third arrow”of supportive measures to facilitate equity financing by developers.Thes

129、e“three arrows”will to some extent improve the balance sheets of real estate enterprises,mitigate their credit risks,and help well-managed private real estate enterprises pursue financing.At the same time,the measures will contribute to the development of a multi-layer real estate financing system t

130、hat should drive the recovery of the real estate market.Generally,we expect the real estate market to remain weak in 2023 as it tries to regain momentum.Residents confidence in the housing market will need to improve;and before that happens,real estate sales will remain sluggish.Besides,the CSRCs po

131、licies concerning the real estate sector highlight that funds from the capital market cannot be used to purchase land or develop new projects6.Therefore,we estimate that real estate enterprises will still be unwilling to launch new projects or acquire land,but they may continue to complete their exi

132、sting projects to respond to the requirement for“ensuring the completion of houses under construction and guaranteeing peoples livelihoods.”Looking forward,a more modest decline in the real estate investment growth rate is expected in 2023,which is predicted to have a smaller impact on the countrys

133、economy compared with 2022.China aims to establish an effective long-term mechanism to ensure the stable and sustainable development of the real estate market.The report of the 20th CPC National Congress(2022)stresses that China will maintain its overall real estate policy that housing is for living

134、,not for speculation.Although the real estate market is facing downside risk in the short term,Chinas urbanisation still presents significant long-term potential for the market,and demand for better housing conditions will continue to increase,helping to stabilise the market.Source:Wind;KPMG analysi

135、s.Data for 2022 is KPMG forecast.Real estate investment growth and real GDP growth,%Fig 13 Real estate investmentGDP(right axis)6 CSRC spokespersons answers to journalists questions regarding support from the capital market for the stable and sustainable development of the real estate market,CSRC,No

136、vember 2022,http:/ Trends Ten Macroeconomic Trends in 2023Economic Insights17 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms o

137、f the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Source:Wind,KPMG analysisGlobal economic growth is expected to slow,weighing on Chinas exports-50-40-30-20-100102030402000200420082

138、01220162020-20%-10%0%10%20%30%40%2022年1月4月7月10月東盟韓國日本歐盟美國Source:Wind,KPMG analysis2022Q1-Q3ASEANSouth KoreaJapanEUUSContribution of net exports to real GDP growth of China,%Fig 14 Chinas monthly export growth to major economies,yoy,%Fig 15 Jan 2022AprJulOctOver the past three years,China has adopted

139、 a pandemic prevention and control policy that emphasised priorities different from those of many other countries.During that period,it gave full play to its well-established supply chains and manufacturing industry to seize opportunities arising from surging foreign demand.By the end of 2021,Chinas

140、 exports accounted for 16%of the worlds total,3 percentage points higher than pre-Covid levels.As the recovery of domestic demand has been relatively slow,exports have become Chinas major economic engine in 2022.Net exports in the first three quarters of the year accounted for over 30%of its GDP gro

141、wth,a record high over the past 20 years(Figure 14).However,foreign demand seems to have cooled down since August 2022,and the prosperity of the major economies such as the United States and Europe has declined.The Purchasing Managers Index(PMI)for the manufacturing industry in the US,UK,and Europe

142、had fallen into the contractionary range by October.Currently,Chinas exports to the US and Europe still exceed 30%of its total exports,so the weaker demand in these countries has weighed significantly on Chinas exports.As a result,Chinas exports have started to show a downward trend,with negative gr

143、owth(denominated in US dollars)recorded in October.Exports to the US and the EU dropped 12.6%and 9.0%year-on-year respectively,the biggest declines for both since April 2020(Figure 15).Ten Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)

144、Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights

145、reserved.18Economic InsightsSource:Wind,KPMG analysis7 KPMG 2022 China CEO Outlook,KPMG analysis,November 2022,https:/home.kpmg/cn/en/home/insights/2022/11/2022-china-ceo-outlook.htmlChinas automotive exportsFig 16 0%2%4%6%8%10%12%14%050100150200250300350400201420152016201720182019202020212022汽車出口數量

146、（千輛）出口占比（%，3mma，右軸）Automotive exports(thousands)Proportion in total exports(%,3-month moving average,right axis)We expect global economic growth to continue slowing in 2023,which will weaken foreign demand and add pressure to Chinas exports.The IMF has lowered its forecast for global economic growth

147、 four times in a row this year.According to its latest forecast in October 2022,it expects global economic growth to drop from 3.2%in 2022 to 2.7%in 2023.Meanwhile,the latest WTO forecast also shows that global trade will lose momentum in the second half of 2022,and growth in the global goods trade

148、is expected to fall from 3.5%in 2022 to 1.0%in 2023.In the 2022 China CEO Outlook recently released by KPMG China,China CEOs shared their views on the prospects for global economic growth,with 90%of respondents saying they believe that it is very likely that the global economy will experience a rece

149、ssion within the coming year7.Against the backdrop of a weak global economy,Chinas exports are expected to grow at a considerably slower or even negative pace in 2023.While export growth is slowing down,it should also be noted that Chinas exports are changing structurally and showing new trends.On t

150、he one hand,as the Regional Comprehensive Economic Partnership(RCEP)deepens cooperation,Chinas exports to the Association of Southeast Asian Nations(ASEAN)have maintained a high growth rate of over 20%since May 2022;and at the same time,exports to South Korea and Japan have seen an increase,showing

151、that the trend of Asian Pacific economic integration will continue to strengthen in the future.On the other hand,as Chinas manufacturing strength keeps improving,its export structure is transforming to include more products from the high-end manufacturing and equipment manufacturing sectors,particul

152、arly the automotive sector.Driven by robust foreign demand for new energy vehicles,Chinas automotive exports have been reaching new highs since 2021,turning the country into the worlds second largest automotive exporter after Germany.In recent years,exports as a share of Chinas total automotive outp

153、ut have soared from less than 4%to over 12%(Figure 16),and new energy vehicles have played an important role in this breakthrough.Recently,many European automotive makers have increased their investments in China,and therefore Chinas exports of automotive products,especially new energy vehicles,will

154、 remain strong in 2023.10 Trends Ten Macroeconomic Trends in 2023Economic Insights19 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member

155、firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Source:Wind,KPMG analysisNote:The zero on the abscissa axis indicates when the Fed started to increase the interest rate,and

156、 the ordinate shows the range of the hikes.The dotted line represents the expected rate hikes as of 3 November 2022.The Fed slows its rate hikes,reducing pressures on RMB exchange rate and capital outflows012345601002003004005006007008009001,000 1,100天天2015-18年2022年8 U.S.Economic Outlook 2023,KPMG U

157、S,December 2022,https:/advisory.kpmg.us/events/webcast-homepage/2022/us-economic-outlook-2023.htmlThe Feds interest rate hikes,%Fig 17 2015-20182022-DaysIn order to rein in high inflation,the Fed had raised its interest rate six times in a row as of November 2022,resulting in a total increase of 375

158、 basis points.Compared with the previous rate-rise cycle from 2015 to 2018,in the current cycle,the US central bank has delivered greater hikes within a shorter timeframe.In terms of inflation data,the year-on-year CPI increase in the US has dropped for four consecutive months to 7.7%in October.Alth

159、ough the Fed will continue to raise the interest rate in the short term to control inflation,the soaring rate is weighing down the US economy and has heightened the risk of a recession.Going forward,we expect that these increases will slow down,and the Fed is quite likely to limit its increase in De

160、cember to 50 basis points,and then pause after notching additional rate rises of 50 basis points and 25 basis points in early 2023.At that point,the market target rate will range from around 5%-5.25%for a certain period of time(Figure 17).We should note that KPMG USs chief economist team expects the

161、 Fed to start cutting the interest rate from the second half of 2023 to lower it back to 2.75%-3%by the end of the year8.Ten Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a M

162、acau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.20Economic Insights數據來源：IIF，畢馬威分析Source:Wind,KPMG analy

163、sis5.65.866.26.46.66.877.27.48085909510010511011512020182019202020212022美元指數（1973年3月=100）美元兌人民幣即期匯率（右軸）-60-40-2002040602015201720192021股票凈流入債券凈流入總投資組合凈流入US Dollar Index and RMB/USD exchange rate Fig 18 Chinas cross-border capital flows,USD millionFig 19 US Dollar Index(March 1973=100)RMB/USD exchang

164、e rate(right axis)Source:Wind,KPMG analysisPortfolio equity flowsPortfolio debt flowsTotal portfolio flowsAs the Fed slows its interest rate increases,the US Dollar Index is expected to decrease,and the RMB yuan may appreciate against the US dollar.Since March 2022,the Feds aggressive moves to push

165、up interest rates have resulted in a strong US Dollar Index,and the RMB exchange rate has consequentially slumped.It fell below 7.3 in October,before going up slightly in November(Figure 18).After the Fed slows its interest rate hikes,external pressure on the Chinese economy will ease.At the same ti

166、me,the Chinese governments economic policy package and subsequent measures will start to take effect,and the countrys economic fundamentals should recover steadily.A balance of payments surplus will also enable the RMB exchange rate to regain ground gradually.Meanwhile,the Feds slowdown in interest

167、rate hikes will undermine the yields offered by US treasury bonds,narrowing the interest rate gap between China and the United States and reducing capital outflows from China.The current cycle of interest rate hikes by the Fed has caused the yields on US treasury bonds to skyrocket.In early November

168、,the yield spread on one-year treasury bonds between China and the US hit a record high of over 3 percentage points.According to data from the Institute of International Finance(IIF),from March to October 2022,Chinas equity and debt markets recorded a total of USD 82.18 billion in net capital outflo

169、ws,which included around USD 71.4 billion from its debt market and around USD 10.8 billion from its equity market(Figure 19).In October,capital outflows from the equity market continued,while capital outflows from the debt market slowed significantly.On 18 November 2022,the Peoples Bank of China and

170、 the State Administration of Foreign Exchange jointly released the Provisions on Administration of Funds Invested in Chinas Bond Markets by Foreign Institutional Investors to further enable foreign investors to invest in Chinas bond markets and enhance the appeal of RMB-denominated assets,with the a

171、im of attracting capital inflows.10 Trends Ten Macroeconomic Trends in 2023Economic Insights21 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,a

172、re member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Source:World Bank,Wind,KPMG analysisGeopolitics remains complex and volatile and companies may need to conduct sce

173、nario planning to mitigate risk0102030405060708020022004200620082010201220142016201820202022美國歐洲日本(LNG)中國(LNG)9 US becomes worlds largest LNG exporter in the first half of 2022,EIA,July 2022 https:/ gas price by region,USD/MMBtuFig 20 USEuropeJapan(LNG)China(LNG)The Russia-Ukraine conflict in 2022 h

174、as caused a chain reaction in various areas of the global economy,worsening global energy and food shortages in the short term and pushing up inflation around the world.For example,Russia is the worlds second largest natural gas producer,so the conflict has had a significant impact on natural gas pr

175、ices,particularly in the European market.Russia is also Europes top energy supplier,with 45%of Europes natural gas coming from Russia in 2021.After the Russia-Ukraine conflict began,Europe sharply cut its energy imports from Russia,leading to surging energy prices there.In August 2022,the price of n

176、atural gas soared to a peak of USD 70 per million British Thermal Units(MMBtu),nearly five times the price in August 2021,and 24 times that of August 2020(Figure 20).In contrast,the United States has been less affected owing to its high level of energy self-sufficiency.Moreover,it has also significa

177、ntly increased exports of liquefied natural gas(LNG)to Europe.According to data from the U.S.Energy Information Administration,the USs LNG exports in the first half of 2022 increased by 12%from the second half of last year,making it the worlds largest LNG exporter,with the EU and the UK importing 47

178、%of Europes total,the largest share9.Natural gas prices were buoyed to a certain extent in China and Japan as well,but not as much as in Europe.Ten Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Ch

179、inese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.22Economic InsightsSource:KPMG 2

180、022 China CEO Outlook,KPMG analysis10%19%25%21%25%8%14%22%25%31%0%5%10%15%20%25%30%35%Execution of ESG initiativesInflation proofing capital and inputcostsAdvancing digitization andconnectivity across the businessIncreasing measures to adapt togeopolitical issuesEmployee value proposition to attract

181、and retain the necessary talentChina CEOGlobal CEOTop operational priority to achieve growth objectives over the next 3 years,%Fig 21 It is worth noting that the conflict between Russia and Ukraine will not only bring about a short-term increase in energy prices but may also cause more in-depth and

182、profound changes in the global geopolitical landscape.China,the United States and Europe account for 55%of the total global economy,and the relationship between them has a dramatic impact on global economic development.Geopolitical conditions will remain complex and volatile next year.On the one han

183、d,the energy crisis has affected industrial production,exports,and investments in Europe,increasing pressure on the recovery of the European economy.Some chemical,steel and other energy-intensive enterprises are reconsidering their global industrial footprint.On the other hand,economic and trade fri

184、ction will be a long-term feature of the relationship between China and the US.The United States continues to exert pressure on Chinas high-tech sector through export controls and other means,but this also brings more development opportunities for Chinese players offering substitute products,such as

185、 IT innovations.Competition between major powers as well as regional conflicts not only raise uncertainty around the operation of the global economy,but also impact the investment and operating strategies of enterprises in various ways.Enterprises should make contingency plans to mitigate such geopo

186、litical risks to the largest extent possible.According to the KPMG 2022 China CEO Outlook report,corporate executives are actively taking measures to achieve business growth in this rapidly changing market environment.A quarter of China CEOs surveyed said that continuously strengthening measures to

187、deal with geopolitical challenges is the most important strategy for them to meet their corporate growth targets over the next 3 years,higher than the global average of 21%(Figure 21).10 Trends Ten Macroeconomic Trends in 2023Economic Insights23 2022 KPMG Huazhen LLP,a Peoples Republic of China part

188、nership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limi

189、ted by guarantee.All rights reserved.Source:OECD,National Bureau of Statistics,KPMG analysisNote:The data for China is for 2021,the data for the other economies are for 2020.Basic research investment is accelerating and national security is continuing to be a key theme for Chinas future developmentM

190、ajor economies proportion of basic research investment in total research investment,%Fig 22 42.0%30.6%23.4%22.8%22.7%21.3%18.3%17.5%15.2%14.7%12.5%6.1%0%10%20%30%40%50%In August 2022,US President Joe Biden signed the Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022(CHIPS

191、 Act),which mainly aims to make the United States more competitive in the global semiconductor industry by stepping up support for the development of its chip industry and preventing specified countries such as China from obtaining advanced chip manufacturing technologies.The Act stipulates that chi

192、p companies receiving federal subsidies are prohibited from building or expanding factories to implement such advanced technologies in countries such as China,and companies that violate this rule must refund their subsidies in full.Recently,technological competition between China and the United Stat

193、es has further intensified.In October 2022,the US Department of Commerce introduced new export control measures as well,further impacting Chinas semiconductor industry.In order to alleviate these bottlenecks and realise technological independence,China has increased its investment in basic research

194、and underlying technologies in recent years.In 2021,basic research investment increased to about 6.1%of its total R&D investment,but there is still a large gap between this figure and those of developed countries(Figure 22).In its 14th Five-Year Plan,China puts forward the new indicator of“proportio

195、n of basic research expenditures in R&D expenditures”and aims to raise that proportion to over 8%by 2025.We expect that China will continue to vigorously drive investment in and policy support for basic research in key areas.Ten Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Republic o

196、f China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English

197、company limited by guarantee.All rights reserved.24Economic InsightsWe should note that more than 90%of Chinas basic research investments have been made by its government and universities;only 3.8%was made by enterprises and almost no investments were made by other social sectors such as private non

198、-profit organisations.This is quite different from the situation in developed countries,where enterprises generally account for more than 20%of basic research investments;at the high end,this figure reached almost 60%in South Korea(Figure 23).In the future,China needs to ensure that enterprises can

199、play a more dominant role in innovation.It may consider tax incentives and other policies to encourage enterprises and other social sectors to invest more in basic research to substantially boost innovation.Source:OECD,KPMG analysisBasic research investment in 2020 by country and sector,%Fig 230%20%

200、40%60%80%100%EnterprisesGovernmentPrivate NGOsCollegesThe report of the 20th CPC National Congress(2022)attaches as much importance to security as it does to innovation,these two areas being the reports two core themes.China will need to strike a reasonable balance between achieving economic and soc

201、ial development and ensuring national safety.Over the past few years,global economic uncertainty has heightened as natural disasters became more frequent,food and energy prices surged,and financial markets fluctuated more significantly.Meanwhile,geopolitical tensions made it even more difficult for

202、governments,enterprises,and residents to deal with these challenges.At the same time,geopolitical conflicts have led to a series of restrictive measures in the economy,finance,technology,and other fields,increasingly turning safety into a critical concern.In the future,China will need to improve its

203、 national safety system,so as to facilitate its new development pattern,ensure the supply of food and energy,and protect important industrial chains and supply chains.Ten Macroeconomic Trends in 2023 2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited

204、liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.25Economi

205、c InsightsKevin KangChief EconomistKPMG China+86(10)Michael JiangHead of Clients and MarketsKPMG China+86(10)Research:Yuan Zeng,CFA;Yanan ZhengDesign:Joe MaContact information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or ent

206、ity.Although we endeavor to provide accurate and timely information,there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.No one should act on such information without appropriate professional advice after a th

207、orough examination of the particular situation.2022 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.