China’s economy saw a growth of 5.2 percent in 2023, aligning with the government’s official projections. Despite meeting the target, concerns over the momentum of future growth persist due to an extended property sector downturn, lackluster consumer and business confidence, and global economic sluggishness.
The National Bureau of Statistics reported that the gross domestic product (GDP) of the world’s second-largest economy also experienced a 5.2 percent increase during the last quarter of 2023 compared to the same period in the previous year.
Kang Yi, leader of the bureau, acknowledged that this growth was hard-earned and noted that the Chinese economy faces challenges such as a complex international environment and weak domestic demand going into 2024. The economy saw only a 3 percent expansion in 2022, largely due to the prolonged COVID-19 restrictions associated with the zero-COVID policy.
Beijing lifted these measures at the end of 2022 and set a growth objective of “around five percent” for the past year. Initially, the economy rebounded post-pandemic, but it soon encountered a drag from ongoing troubles in the real estate market where the government has been striving to control enormous debts and speculation. Other issues affecting growth include high youth unemployment and a global downturn.
Last year marked the first drop in exports since 2016, according to the data released by the customs agency on Friday.
Li Qiang, the Chinese Prime Minister, offered an optimistic perspective on China’s economic situation while addressing business leaders in Switzerland [Gaetan Bally/Pool via AFP].
Increased geopolitical tensions with the United States and moves by some Western nations to cut dependencies on China or diversify their supply chains have also affected economic performance. Chinese officials are set to announce their growth goal for 2024 in March.
China is actively trying to win back international investors who have grown wary of the Chinese economic narrative. Speaking at the World Economic Forum in Davos, Premier Li Qiang emphasized that China met its economic goals without resorting to “massive stimulus” programs. He highlighted China’s “solid and good fundamentals for long-term development” and the country’s commitment to maintain its open-door policy. Li presented investing in China as “not a risk, but an opportunity.”
However, risks are present under the leadership of Xi Jinping. Last year, the business community expressed concern after multiple raids on consultancy and investigative firms were conducted in the wake of the expansion of the Chinese espionage law, while the housing market issues are still unresolved.
The real estate sector has been a substantial part of China’s economy for nearly two decades, sustaining high growth rates. Yet, financial difficulties at major developers like Evergrande and Country Garden have led to uncompleted projects, buyers in distress, and falling prices.
Another significant concern plaguing the economy is the scarcity of jobs for young people. Official figures from May indicated that more than one out of five individuals between the ages of 16 to 24 were unemployed, leading Beijing to stop the publication of monthly youth unemployment statistics.
A second consecutive year of population decline in 2023 casts long-term uncertainty on China’s growth potential. This trend stems from record low birth rates and a surge in COVID-19 deaths following the lifting of zero-COVID protocols.
The National Bureau of Statistics has announced that the population reduced by 2.08 million, or 0.15 percent, falling to 1.409 billion in 2023.
This decrease, which was more pronounced than the decline of 850,000 in 2022, the first dip since the Great Famine in 1961, raised alarms. Last year’s deaths saw an upswing of 6.6 percent to reach 11.1 million, the highest mortality rate since the Cultural Revolution in 1974. Additionally, new births dropped 5.7 percent to just over 9 million, with the birth rate plummeting to a historic low of 6.39 births per 1,000 people, down from 6.77 in the preceding year.
(Al Jazeera)
