China will need to further stimulate economy to accelerate growth – GDP
China’s economy grew by 5.2% in 2023, slightly exceeding the official target, however, the recovery was more uncertain than anticipated, with a range of issues affecting economic stability.
A deepening property crisis has become a significant concern, despite government efforts to support the sector.
The property crisis is contributing to deflationary risks and affecting overall economic outlook, weak consumer and business confidence played a role in the economic challenges, impacting demand and investment, while mounting local government debts added further pressure on economic conditions.
Slowing global growth has had a notable impact on China’s economic performance.
The expected strong post-COVID bounce did not materialize as global conditions weighed on jobs, activity, and investment.
Economic data from October-December indicated a growth rate of 5.2%, up from the previous quarter but slightly below forecasts.
On a quarter-by-quarter basis, GDP growth slowed to 1.0%, reflecting a loss of momentum heading into the new year.
December indicators revealed a deepening property crisis despite government intervention.
Retail sales growth slowed, and investment remained tepid, with only industrial output showing signs of improvement.
Economic Outlook for 2024:
Economists expect Beijing to maintain a growth target of around 5% for the coming year, however, structural issues, such as over-reliance on debt-fueled investment and infrastructure, are expected to pose challenges to sustainable growth.
Insufficient demand and a complex external environment are also expected to impact the economy in 2024.
Despite government support measures, the economic challenges persist, indicating the complexity of addressing deep-seated issues.
Although there are some encouraging signs in the latest economic figures, persistent challenges such as the property crisis and structural issues require careful attention.
The government’s ability to navigate these challenges and stimulate sustainable economic growth will be crucial for China’s economic prospects in 2024.