China’s economic rebound lowers the odds of a global recession
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Why markets are optimistic
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China seems to be well on its way to our 5.3 per cent growth forecast for 2023, which is slightly higher than consensus (5.1 per cent as I write this) and higher than our earlier estimate of 4.5 per cent back in 2022.
We had expected China’s COVID exit strategy to be bumpy and gradual. It turned out be even bumpier and not at all gradual after the country’s sudden reversal on its zero-COVID policy. China’s Center for Disease Control and Prevention estimates that 80 per cent of the population has already been infected by COVID, so the nation may have already passed peak infection levels and achieved herd immunity, lowering the hurdles for further economic growth this year. This will likely have a positive impact not just on China but globally.
That said, recent surges in the global equity and commodity markets suggest that some may be overly optimistic about the impact China’s rebound will have on the rest of the world.
Why the impact may not meet expectations
What’s causing this rosy outlook? Drawing upon experiences in the United States and other developed countries, some media and market watchers are anticipating what they call “revenge spending”—pent-up demand and accumulated savings after three years of COVID lockdowns leading to a tide of Chinese consumer spending that will lift all boats. Some have estimated that as much as RMB 4 trillion to 6 trillion of excess savings accumulated over the past three years may flood the world’s markets.
In our opinion, the actual range is substantial but more modest. Depending on different assumptions of the saving trend, we believe that China’s excess savings over the past three years could be in the range of RMB 1.5 trillion to 4 trillion, but closer to the lower end—roughly RMB 2 trillion, or AUD 431 billion.
Several factors play into our more moderate estimate of the impact:
Much of the savings over the past three years came from fewer home purchases and from redemptions of investments during a period of market turmoil—not the kind of savings that people would readily use for consumer goods and services.
Unlike consumers in developed markets, Chinese households didn’t experience a persistent supply shortage of goods. Further, auto sales have been largely front-loaded in the second half of 2022, thanks to tax incentives. So there may be less pent-up demand than some would expect.
Household fundamentals are also much weaker than in developed markets because of surging household debt over the past decade, limited fiscal transfer during the pandemic, three years of low income growth and high unemployment, and negative wealth effects from the sharp decline in housing prices last year.
Most of the excess savings are held by wealthy households, who have less propensity to spend than the less affluent, at least in proportion to their assets. For the less wealthy, the precautionary saving incentive is unlikely to fade immediately given the lagging recovery in labor markets, the flimsy social safety net, and the uncertain long-term outlook.
Chinese household consumption accounts for only 38 per cent of the country’s GDP; in comparison, in the United States, it’s roughly 70 per cent of GDP. Increasing China’s private consumption by 10 per cent translates to a 4 per cent increase in its GDP. So the impact will not be as great for China as it was for the U.S. when it went through its post-lockdown bounce.
Who would benefit the most from Chinese consumers
Any immediate rebound in consumption could come from the well-off in China more than the common laborer. When the affluent do spend, the immediate beneficiaries will likely be the makers of luxury goods, the tourism industry, and educational services.
In pre-COVID 2019, Chinese travelers accounted for roughly 20 per cent of all tourism spending, according to data from the World Trade Organisation. If that type of spending pattern resumes for 2023, the economies most likely to benefit are those in Asia. (Nine of the top 10 countries most visited by Chinese tourists in 2019 were in Asia).
Educational services—primarily overseas study at universities—will also likely rebound, mainly in Australia, the United Kingdom, and the United States.
A rebound in China’s economy, particularly for travel, will also benefit exporters of commodities such as oil and natural gas. However, this also means higher inflationary pressures that present a challenge for central banks.
Why we might just avoid a global recession
China already accounts for about 20 per cent of the global economy. Any rebound in its demand for imported goods and services will have a positive impact, if not necessarily of the magnitude others might expect.
Last year, we estimated that the likelihood of a global recession in 2023 was roughly 50/50. With China rebounding at our projected rate, we believe that chance is now less than 50 per cent. (The World Bank defines a global recession as an annual contraction in world real per capita GDP accompanied by a broad decline in various other measures of global economic activity.)
Why our outlook for China’s long-term growth is guarded
Despite the cyclical upturn, our long-term outlook for China is cautious. As we pointed out in our 2021 paper, China has several structural challenges—among them, an aging population, fading globalisation, and a retreating private sector—and that hasn’t changed. China’s population fell in 2022 for the first time since 1961. China might grow old before it becomes rich.
Over the long run, China’s annual GDP growth may fall to the 3 per cent‒4 per cent range or lower—still healthy and more sustainable, but not quite the economic engine that has helped boost the global economy in recent decades.
For now, China may provide just enough impetus to keep the world economy from dipping into a recession.
Qian Wang Chief Economist, Asia-Pacific Head of the Vanguard Capital Markets Model vanguard.com.au
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Retiring on your own terms is not always easy to achieve, however it is evident that those who plan for retirement are more likely to do so. Results also show that obtaining professional help during the pre-retirement years further improves the probability of attaining your retirement objectives.
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Self Managed Super Funds
Self-Managed Superannuation Funds (SMSFs) offer a good strategy option for many individuals, families and small business owners to build tax effective wealth and to protect assets over time. SMSFs are becoming popular for those who are ready to take control of their own super investments as they give you ultimate control and flexibility to manage your retirement benefits.
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Wybenga Financial can work with you to understand your personal financial situation and decide whether a SMSF structure is appropriate for you. We will also make sure your assets are invested in the most effective way to maximise your retirement benefits.
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Strategic Planning
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General Calculators
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Tess has over 22-years experience in Chartered Accounting Firms and in this time has had a broad range of experience in superannuation, taxation, business services, and financial strategy.
Over the last seven-years, Tess has turned her attention to Financial Planning, earning a Diploma of Financial Planning in 2015 and leading the newly established financial division of the Wybenga Group as a director of Wybenga Financial.
Tess’s mission is to bring the ethics and integrity of her Chartered Accounting background to the area of wealth management.
As a woman in a male dominated field, Tess is active in promoting gender equality in the industry through various programs and mentoring opportunities.
Using her depth of knowledge and experience in tax and accounting Tess is able to demonstrate a level of competence that is unique in the Financial Planning sector.
2001 – Commenced employment with Wybenga & Partners and part-time accountancy studies
2004 – Graduated Masters of Commerce from the University of New South Wales
2005 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
2007 – Promoted to Manager at Wybenga & Partners
2012 – Appointed as Associate Director
2015 – Awarded a Diploma of Financial Planning
2016 – Appointed as Partner of Wybenga Group and Director of Wybenga Financial
Schedule a Meeting with Tess
Adam Roberts
B.Bus, B.Sc, CA, DipFP
Adam has over 18-years experience in Chartered Accounting Firms and in this time has had a broad range of experience in superannuation, taxation, business services, and financial strategy.
Over the last seven-years, Adam has turned his attention to Financial Planning, earning a Diploma of Financial Planning in 2015 and leading the newly established financial division of the Wybenga Group as a director of Wybenga Financial.
Adam’s mission is to bring the ethics and integrity of his Chartered Accounting background to the area of wealth management.
Combining traditional accounting and financial services has been a welcome move for Adam, allowing him to operate and advise in the financial sector that has been a long time personal passion.
Using his depth of knowledge and experience in tax and accounting Adam is able to demonstrate a level of competence that is unique in the Financial Planning sector.
2005 – Graduated Bachelor of Science from the University of Western Sydney
2005 – Commenced employment with Wybenga & Partners and part-time accountancy studies
2007 – Graduated Bachelor of Business from the University of Western Sydney
2010 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
2010 – Promoted to Manager at Wybenga & Partners
2012 – Appointed as Associate Director
2015 – Awarded a Diploma of Financial Planning
2016 – Appointed as Partner of Wybenga Group and Director of Wybenga Financial
Schedule a Meeting with Adam
Advisory Cadetships
What is an Advisory Cadetship? An Advisory Cadetship enables you to commence your career whilst attaining the necessary university qualifications by studying part-time.
How does it work? Generally, our cadets complete a relevant business or accounting degree at the University of New South Wales, the University of Technology Sydney, Macquarie University, or the University of Western Sydney.
The Firm provides 3-hours paid study leave per week to attend university. This can either be taken at the one time or broken between days depending on the individual’s requirements. In addition, the Firm provides paid study leave for both mid-semester and end-of-year exams.
We take the work life balance very seriously at Wybenga Financial and our cadets are encouraged to have a fulfilling life outside the office. A typical day will have you arriving at the office at around 8.30am with most days concluding at 5.30pm.
What are the benefits of an Advisory Cadetship with Wybenga Financial? Our cadets benefit from the following:
Career path – on completion of their degree our cadets have significant practical experience which will assist them in advancing their careers
Work helps your studies – by working full-time our cadets are able to apply their practical knowledge in the university subjects
Camaraderie with other cadets – the Firm has a number of cadets at various stages of their career
Mentoring – cadets are paired with a senior staff member who oversees their progress and training both at work and with their studies
Communication and feedback – the Firm has an open door policy which enables all cadets to interact with all members of staff including Directors
Culture – the Firm promotes a friendly social culture with a number of functions throughout the year
Modern environment – including ‘socialising’ areas such as pool table and break out area
Training – ongoing support and technical training. We also provide internal and external training on a monthly basis
Remuneration – working full-time provides a market salary and independence with salaries being reviewed every 6-months
What happens when I complete my degree? The completion of your degree is the first step of what we hope to be a long and successful career with us. The next step is the commencement of a Diploma of Financial Planning followed by completing the requirements to become a Certified Financial Planner (CFP).
There are always progression opportunities for the right cadets and we are dedicated to the long term development of our staff.
Who should apply? Current Year 12 students or first/second year University Students who:
want to commence their career in financial advisory;
are due to commence or are currently completing a part-time business or commerce degree at university with an advisory major;
want to gain valuable hands-on experience while completing their qualifications;
are looking for a friendly working environment;
are team players who display initiative;
have a commitment to self-development;
possess excellent personal presentation and communication skills; and
are motivated and mature minded.
How do I apply for an Advisory Cadetship? To apply for a Cadetship position at Wybenga Financial send us your details. Please also include in your covering letter why you wish to do a cadetship, include relevant qualities you possess, main interests / achievements, and any previous employment.
Interested candidates should initially forward a resume/covering letter of no more than 3-pages. Please provide full details of contact information (telephone or e-mail).
What if I have more questions? For further information about our Cadetship program, please send your enquiry to .
