Analysts say the Chinese government faces a “more difficult” environment in which it will have to navigate the country’s economy in 2024, and that leadership will need to reduce debt, deflation and weak trust to meet the challenge. We need to dig deeper into our toolbox to alleviate the increasing pressures of our emotions.
The assessment came amid continued concerns over the asset, debt and trade situation, even though the National Bureau of Statistics (NBS) on Wednesday reported better-than-expected economic growth of 5.2% last year.
“The recovery remains fragile,” London-based research firm Capital Economics said in a report. “China’s economy lost momentum in the fourth quarter, and the reasons seem to be as follows.” [policymakers] The full extent of the weakness was not recognized earlier this year. ”
The world’s second-largest economy also grew by 1% quarter-on-quarter in the past three months of 2023, according to NBS, and the Chinese government’s stimulus measures pushed the economy back on track, with quarter-on-quarter growth rising to 1.3% in the third quarter. Efforts to prevent it from falling out of place.
“achieve the same pace” [as last year] It will become even more difficult in 2024,” the research firm said.
Larry Hu, Macquarie’s chief China economist, warned that the economic downturn could continue into the first quarter of 2024, given headwinds such as slowing demand, deflation risks and a struggling real estate sector.
“The downturn in the real estate sector is the main reason for weak demand, weak momentum and weak sentiment. This is a priority for the Chinese government.”
Real estate investment, which has been a major drag on the economic recovery after the coronavirus pandemic, fell by 9.6% for the full year of 2023, after declining by 9.4% in the first 11 months of the year.
China’s youth unemployment rate recovers, reaching 14.9% after adjustment
China’s youth unemployment rate recovers, reaching 14.9% after adjustment
Chinese authorities are expected to release annual growth targets for gross domestic product, deficit ratios, municipal bond allocations and inflation in March.
At a press conference on Wednesday, statistics bureau chief Kang Yi said policies adopted last year will be implemented this year, including special bonds worth 1 trillion yuan (US$139 billion) approved in October. The central government will prepare a series of new support policies.
“This will ensure the stable operation of the national economy,” he said. “Our policy toolbox is constantly enriching. There is relatively large room for maneuver in fiscal, monetary, and other policies.”
Many economists are warning that weak confidence in both private investment and consumption will persist.
In a sign of deep-rooted weakness, private sector investment fell by 0.4% last year, compared with a 3% rise in overall fixed asset investment.
Retail sales growth slowed to 7.4% in December from 10.1% in the previous month, and retail sales in 2023 rose 7.2% from a year earlier.
Consumption contributed 4.3% to last year’s growth rate, while investment contributed 1.5%. Net exports pushed down the growth rate in 2023 by 0.6 percentage points.
Chen Chi-wu, chair professor of finance at the University of Hong Kong, said restoring trust is key, but it takes more than just talking.
“A really useful and meaningful way to increase confidence in households and private business is to depoliticize both economic policy-making and the business sector,” he said. “Otherwise, the ‘3D’ challenges of deflation, debt and deleveraging will continue.”