China posted a GDP growth of 5.2% for 2023, successfully meeting last year's annual target and in line with market forecasts. Chinese economists also predict that the economy is likely to pick up pace and grow steadily in 2024 after a bumpy recovery last year, propelled by the gradual increase in domestic demand and with more stimulus policies. The world's second-largest economy is now valued at CNY126 trillion and an official with the National Bureau of Statistics (NBS) projected that China was the world's largest growth engine for the past year. In the fourth quarter of 2023, China's GDP expanded 5.2%. Chinese analysts said the GDP reading showed that China's economy has achieved a remarkably steady growth and emerged from the shadows of the pandemic over the past 12 months, despite factors including a slowdown in the real estate industry. Standout achievements include vibrant services sector spending, substantial investments in high-end manufacturing, and notable progress in foreign trade activities. China's 5.2% growth in 2023 far exceeded an estimated average of 3% growth of the world economy. Contribution of the Chinese economy to the world economy is expected to exceed 30% with China becoming the largest growth engine of global growth. The increase of China's GDP in 2023, at more than CNY6 trillion, equals the whole year GDP of a medium-sized country.
Retail sales of consumer goods were up 7.2%. Analysts said the government will need to tackle a number of issues including ultra-low inflation and a weak property sector in 2024, while calling for the rolling out of more pro-growth stimulus. Cao Heping, Economist at Peking University, told the Global Times that the fact that the Chinese economy can achieve a 5.2% growth rate under the severe conditions last year is a proof that it has firmly developing the new economy, which is powered by digital technologies. But China's recovering industrial sector faces uncertainty of overseas demand, spillover effects of geopolitical conflicts and the reshaping of global industrial and supply chain, Zhou Maohua, Macro-economic Analyst at Everbright Bank said. Xing Zhaopeng, Senior China Strategist with ANZ Research, said China is expected to set a GDP growth target of 5% for 2024 and “potential growth should still be above 5%. “We expect China will roll out strong measures to guide the green consumption and investment, to help offload the excess supplies in the economy,” Xing told the Global Times. “In 2024, we expect China's economy to grow by around 5%, which would be very impressive,” Li Daokui, Director of Tsinghua University's Academic Center for Chinese Economic Practice and Thinking (ACCEPT), said at a recent forum. According to the Chinese Academy of Sciences Center for Forecasting Science, China's economy will maintain a stable growth in 2024, with forecasted GDP growth hitting 5.3%.
China's consumption in 2023 played a vital role in bolstering economic development, contributing 82.5% of overall GDP growth, while retail sales set a new record of CNY47.15 trillion, according to the NBS. The booming consumption underscored China's steady progress from being an investment-driven economy to one that is consumption-driven, experts said, and the sector will remain an indispensable driving force for economic development this year. China's consumption in 2023 demonstrated a continuous recovery, as retail sales grew 7.2% to a record high, NBS Director Kang Yi said. Consumption drove economic growth by 4.3 percentage points, 3.1 percentage points higher than the previous year, while the 82.5% contribution to GDP growth was 43.1 percentage points higher than in 2022. The catering sector generated sales of CNY5.29 trillion, up 20.4%. Retail sales of services grew 20%, 14.2 percentage points faster than retail sales of goods. Total online retail sales in China reached CNY15.43 trillion in 2023, up 11% over 2022. Among the total, online retail sales of physical goods reached CNY13.02 trillion, accounting for 27.6% of total retail sales, up 8.4% year-on-year, the NBS added. China’s retail sales growth slowed to 7.4% in December, from 10.1% a month earlier. “Retail sales growth fell notably in year-on-year terms in December and missed expectations, driven mainly by slower automobile and home appliance sales growth, although year-on-year growth in Covid-sensitive restaurant sales rose further thanks to favorable base effects,” said analysts at Goldman Sachs.
Property investment in China fell by 9.6% for all of 2023. The property slump also affected the recovery of the private sector, which is a backbone of growth and job creation, as the sector’s investment fell by 0.4% in 2023. Fixed-asset investment (FAI) in China, which includes spending on factory equipment, construction and infrastructure projects that help drive economic growth, grew by 3%, year-on-year, in 2023. Industrial output in China grew by 4.6% last year. China resumed the release of its youth jobless rate in December after a nearly half-year suspension, and the newly adjusted monthly rate for the 16-to-24 age group stood at 14.9%. The monthly release of the youth jobless rate had been suspended since July after hitting a record high of 21.3% in June. China’s urban surveyed unemployment rate, meanwhile, stood at 5.1% in December.
At least five of China’s top urban economies have set their 2024 growth targets at above 5%, indicating China’s ambition to accelerate economic growth this year – with a likely national target for 2024 remaining around 5%. China has 25 cities with an annual economic size of over CNY1 trillion – equivalent to the gross domestic product (GDP) of Slovakia. The eastern city of Ningbo, which has the world’s busiest seaport, and Hefei, capital of Anhui province, set economic growth targets of around 6% for 2024. Hefei is aiming to establish itself as China’s answer to the Motor City of Detroit in the United States as it is home to Volkswagen, Nio and BYD research centers. Changzhou, in Jiangsu province, set a target of above 6%. It is home to a subsidiary of Contemporary Amperex Technology (CATL), which is the world’s top battery maker. Nanjing, capital of Jiangsu province, and Guangzhou, capital of Guangdong, fixed their targets at above 5%.
The number of newly established foreign-invested enterprises in China reached 53,766 in 2023, up 39.7% year-on-year. Foreign direct investment (FDI) in the Chinese mainland, in terms of actual use, reached more than CNY1.13 trillion in 2023, down 8% year-on-year, the Ministry of Commerce (MOFCOM) announced. Meanwhile, FDI in the high-tech manufacturing sector rose 6.5% during this period.
This overview is based on reports by the Global Times, the China Daily and the South China Morning Post.
