The average forecast for China's real gross domestic product (GDP) growth in 2023 is 5%. That's down 0.5 percentage points from the previous survey three months ago. Some economic indicators are showing signs of economic recovery, but there are growing concerns about the worsening of the real estate market.

The expected range is between 4.5% and 5.6%. Out of 29 respondents, at least 26 lowered their forecasts from the previous survey, and 12 out of 40 lowered their forecasts to around 4 percent. The expected range is largely within the "around 5 per cent" that the Chinese government has set as its growth target for 2023.

The average GDP forecast for July-September was 4.4% higher than a year earlier. Quarter-on-quarter (seasonally adjusted) growth, a sign of economic momentum, is expected to be 1.3 percent, recovering from 0.8 percent in the April-June period.

Growth momentum is weak. At the beginning of the transition of quarantine measures and economic recovery, the expectation that the economy will recover quickly in 2023 has strengthened, but the outlook is becoming increasingly difficult to predict.

The main reason is the deterioration of the housing market. Wang Tao of UBS sees a deepening property slump, further weakening external demand and weaker-than-expected policy support, cutting her forecast by 0.4 percentage points to 4.8% growth in 2023. Fan Xiaochen of Mitsubishi UFJ also sees a slump in property-related investment and consumption, forecasting growth of 4.8 per cent, down 0.9 percentage points from three months ago.

In China, the management difficulties of real estate development enterprises have surfaced one after another. Consumers are hesitant to buy homes, and the reversal of worsening conditions continues. In August, the government introduced measures such as lowering the downpayment ratio, but the survey showed that the evaluation of a series of policies was lower than expected.

Shen Jianguang of JD.com believes that the economic stimulus policy lacks continuity and can not see the effect. Mizuho Bank's Hideki ITO also said that "the main measures are not accompanied by fiscal stimulus, and the impact on the economic growth rate is limited."

Katrina Ell of Moody's Analytics pointed out that the government is tolerating a slowdown in growth by refraining from massive stimulus measures to prevent a real estate bubble from inflating.

On the other hand, there are signs of economic recovery. The manufacturing purchasing managers' index (PMI) reached 50.2 in September, breaking the 50-point line that separates expansion from contraction for the first time in six months. Some economic indicators, especially the manufacturing sector, showed a recovery trend. On the consumption side, while consumer durables such as real estate performed poorly, services such as tourism and catering maintained good momentum. Chen, of OxfordEconomics, said he could see a boost from stimulus measures and the economic cycle, saying the economy probably bottomed out in July. Bert Burger of Atradius said there was "hope for a recovery outside of real estate" due to progress in corporate destocking, among other things.

The survey listed several options and asked about the issues facing the economic recovery. Most respondents cited the property market downturn, followed by fragile consumer sentiment and local government debt.

Ana Boata of Allianz Trade said, "The continued rise in youth unemployment will restrain consumption and lead to a decline in demand, including real estate," worrying about the deterioration of consumer sentiment.

Tetsuji Sano of Sumitomo Mitsui DS Asset Management believes that the Chinese government will avoid debt treatment that would classify troubled companies as "good" and burden banks, and although "the likelihood of risks emerging in the banking system is low", there is concern that "continued lending to zombie companies will further reduce the effectiveness of monetary policy".

China's population will decline in 2022, and the future outlook is also clouded. On average, the projected growth rate is 4.5 percent in 2024 and 4.4 percent in 2025, down 0.3 and 0.2 percentage points, respectively, from the previous survey.

The survey also showed that in addition to the huge debt problems of real estate companies, there is a perception that the confrontation between China and the United States will pose risks to the economy.

Huawei Technologies, a major Chinese telecommunications equipment company, has introduced a high-performance chip with a line width of 7 nanometers (nanometers are 1 billionth of a meter) in its new smartphone. It is possible that the United States has broken through the barrier that has hindered China's semiconductor development.

Lombard Odier's Homin Lee said this "provides the impetus for further attempts by the US and its Allies to contain China", arguing that further tightening of controls on China is likely.