- China meets 2023 growth target
- Economic challenges persist
- Population decline raises concerns
The government reported that the Chinese economy met the official growth objective of 5.2 per cent in 2023. However, a prolonged property crisis, sluggish consumer and business confidence, and weak global growth continue to raise concerns regarding growth momentum.
The gross domestic product (GDP) of the world’s second-largest economy increased by 5.2% in the last three months of 2023, according to the National Bureau of Statistics of China, compared to the same period the previous year.
The bureau’s director, Kang Yi, characterised the expansion as “hard-won” and warned that the economy would enter 2024 with a complex external environment and inadequate demand.
China’s economy expanded by a mere 3 per cent in 2022 due to the extended COVID-19 regulations associated with the country’s zero-COVID policy.
After lifting the restrictions in 2022, Beijing set an approximate five per cent growth target for the previous year.
The ongoing property market crisis has burdened the economy, authorities’ efforts to rein in enormous debts and speculation, record youth unemployment, and a global slowdown following an initial post-pandemic recovery.
Historically a critical growth driver, exports experienced their first annual decline since 2016 in 2018, according to data released by the customs agency on Friday.
Additionally, geopolitical tensions with the United States and the efforts of some Western nations to diversify their supply chains or reduce their reliance on China have impacted growth.
In March, we anticipate Chinese authorities will disclose their growth target for 2024.
“Not a danger”
China is trying to entice foreign investors who have developed growing scepticism regarding the country’s growth trajectory.
Premier Li Qiang of China stated at the World Economic Forum in the Swiss resort of Davos that his nation had accomplished its economic objective without needing “massive stimulus” and portrayed an optimistic picture of the situation.
He asserted that China’s long-term development was founded upon “good and solid fundamentals” and that Beijing would “maintain its fundamental national policy of opening to the outside world.”
Li framed his investment decision in China as “an opportunity rather than a risk.”
However, dangers are abundant during the reign of Chinese leader Xi Jinping.
A series of searches on consulting and due-diligence firms in retaliation for Beijing’s expansion of its espionage law sparked widespread concern last year. However, no one has resolved the issues plaguing the real estate market.
The sector has historically comprised approximately one-fourth of China’s economy and has witnessed phenomenal expansion for the past two decades.
However, major developers’ financial difficulties, including those of Evergrande and Country Garden, have resulted in unfinished projects, out-of-pocket purchasers, and falling prices.
An additional challenge confronting the economy is the need for more employment opportunities for the nation’s youth.
According to official data, in May, more than one in every five individuals in China between the ages of 16 and 24 were unemployed.
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China’s Demographic Challenges Unveiled
Since then, Beijing has ceased to release monthly statistics on juvenile unemployment.
In addition, China’s growth potential is called into question over the long term following its announcement that the population would decline for the second year in succession in 2023 due to a record-low birth rate and a surge in COVID-19 fatalities following the abrupt lifting of zero-COVID policies.
According to the National Bureau of Statistics, China’s population decreased by 2.08 million in 2023, or 0.15 per cent, to 1.409 billion.
That was significantly greater than the 850,000-person population decline in 2022, the first since 1961, during the Great Famine of Mao Zedong’s regime.
The death toll peaked at 11.1 million in the previous year, an increase of 6.6%. This is the highest death toll since 1974, during the Cultural Revolution.
The number of new births decreased by 5.7% to 9.02 million, resulting in an all-time low birth rate of 6.39 per 1,000 individuals, compared to 6.77 per 1,000 in 2022.
