~2.jpeg)
China's economy grew by 5.2 percent in 2023, hitting the government’s official target, but concerns about growth momentum remain amid a protracted property crisis, sluggish consumer and business confidence, and weak global growth.
China’s National Bureau of Statistics reported a 5.2 percent growth in the final three months of 2023, compared with the same period last year. The bureau’s head, Kang Yi, emphasized the "hard-won" nature of the expansion and cautioned about a complex external environment and insufficient demand moving into 2024.
After a 3 percent growth in 2022 due to prolonged COVID-19 regulations, China set a growth target of "around five percent" for 2023. However, the economy faced challenges from the ongoing property market crisis, attempts to rein in debts and speculation, record youth unemployment, and a global economic slowdown.
Exports, historically a key growth lever, fell last year for the first time since 2016, according to customs agency figures.Chinese Prime Minister Li Qiang, speaking at the World Economic Forum in Davos, portrayed a bullish picture, stating that China achieved its economic target without massive stimulus. He emphasized China's "good and solid fundamentals" for long-term development and advocated for adhering to the basic national policy of opening up to the outside world. Li positioned investing in China as an "opportunity" rather than a risk.
Despite this optimism, challenges persist. The expansion of China's espionage law led to raids on consultancy firms, raising concerns about privacy and legal implications. The unresolved issues in the property market, a significant portion of China's economy, pose a substantial risk. Financial troubles at major developers, including Evergrande and Country Garden, have left projects unfinished and contributed to declining prices.
Youth unemployment has emerged as a significant concern, with over one in five people aged 16 to 24 in China being unemployed in May. Beijing's decision to stop publishing monthly youth unemployment figures adds complexity to understanding the extent of the issue.
China faced its second consecutive year of population decline in 2023, marked by a record low birth rate and increased deaths. The National Bureau of Statistics reported a decline of 2.08 million people, or 0.15 percent, bringing the total population to 1.409 billion. The demographic challenges pose questions about China's growth potential in the long term.
In navigating the economic landscape of 2023, China stands at a critical juncture. While achieving the GDP growth target, the nation grapples with multifaceted challenges ranging from the property crisis to geopolitical tensions. Premier Li Qiang's optimistic outlook contrasts with the complex realities on the ground, necessitating a nuanced understanding of the factors influencing China's economic trajectory. As the government prepares to unveil its growth target for 2024, the world watches to discern whether China can overcome these challenges and sustain its position as a global economic powerhouse.
Comments