China’s Economy Grows by 5.2% in 2023, But Slowdown Expected in 2024

▲ In May last year, people were seen eating bread in front of a bakery in a shopping mall in Beijing, China. Photo=Newsis

China recorded a commendable economic growth rate of 5.2% in 2023, the first year of the post-pandemic era.

However, some argue that it is still too early to celebrate due to the Chinese economy’s risks, such as a contraction in domestic demand, a slump in real estate, and deflation.

On the 17th, the Chinese National Bureau of Statistics announced that China’s Gross Domestic Product (GDP) for 2023 increased by 5.2% compared to the previous year, reaching 121.2 trillion yuan.

This aligns with the analysis made by Li Keqiang, the head of China’s economy, at the World Economic Forum (WEF) annual meeting on the 16th (local time), stating that “China’s economic growth rate will reach 5.2%, meeting the government’s target of ‘around 5%’.”

Notably, this matches the growth rate forecast (5.2%) announced by Bloomberg and generally aligns with the initial estimates of the International Monetary Fund (IMF·5.4%), the Organization for Economic Cooperation and Development (OECD·5.2%), and the World Bank (WB·5.1%).

China’s GDP for the last quarter of last year also recorded a 5.2% increase compared to the previous year’s period.

Although China’s GDP growth rate last year was higher than the first year of the COVID-19 pandemic in 2020 (2.2%) and the second half of 2022 (3.0%), it is still lower than the growth rate before the pandemic.

Before the Covid-19 pandemic, China’s growth rate showed a range of 6~9%, with 9.6% in 2011, 7.9% in 2012, 7.8% in 2013, 7.4% in 2014, 7.0% in 2015, 6.8% in 2016, 6.9% in 2017, 6.7% in 2018, and 6.0% in 2019.

Especially in 2021, it surprisingly rebounded to 8.4% thanks to the base effect of the significantly contracted 2020.

However, considering the base effect 2022 (3.0%), some argue that the report card 2023, the first year of “Living with Covid,” fell short of expectations.

Additionally, some point out that without a strong fiscal stimulus this year, a growth rate in the 5% range will not be achievable.

For the main reason, they cite that although the annual fixed asset investment increased by 3.0% compared to the previous year, real estate development fell by 9.6%, indicating that the stagnant real estate market is still showing no signs of recovery.

The annual Consumer Price Index (CPI) also increased by 0.2% compared to the previous year, but the CPI in December fell by 0.3%.

As a result, China’s consumer prices have been falling for three consecutive months, increasing concerns about deflation (price decline during an economic downturn).

In addition, last year’s unemployment rate in China was 5.2%, with the unemployment rate in December increasing by 0.1% compared to November (5.0%), indicating a series of bad news.

The Financial Times (FT) analyzed, “Economists expect the Chinese government to set this year’s official growth target in the 5% range, but forecasts suggest that achieving this target will be even more difficult due to the excess in the real estate market and deflationary pressures.”

Based on analysts’ views, Bloomberg stated, “If Chinese authorities want to stimulate economic growth this year, stronger fiscal stimulus measures are needed.”