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China surpasses growth target for 2023 with 5.2% expansion, but tough road lies ahead

2024-01-17 00:00:00.0 海峡时报-亚洲原网页

BEIJING – China’s economy grew 5.2 per cent in 2023 on the back of government spending – exceeding the official target of around 5 per cent – but the road ahead this year remains rocky, analysts said.

To sustain the hard-won momentum, policymakers will need to do more in 2024, given that China’s beleaguered property market and tepid consumer demand are expected to continue to weigh on growth, they added.

Officials will have their work cut out for them, as “looking back in 2023, investor confidence and consumer sentiment have proved to be difficult to repair and restore”, said Professor of Economics Albert Hu at the China Europe International Business School in Shanghai.

In a move to further boost confidence in China’s economy, Premier Li Qiang released the full-year growth figure in his address to the World Economic Forum – a gathering of the world’s top policymakers and analysts – in Davos, Switzerland, on Jan 16, one day before the traditional release of the closely watched full-year economic data by the National Bureau of Statistics (NBS).

Dr Dan Wang, chief economist at Hang Seng Bank in Shanghai, told The Straits Times: “I think he was really trying to prop up market confidence and give people more hope (with the unusual release).”

Doubts had risen among economists that China could hit its stated target when the country released its half-year growth figure in July.

The doubts were a quick reversal of fortune from March, when China announced its target of around 5 per cent during the country’s annual parliamentary meetings and economists said the goal was low, especially given 2022’s stunted base.

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In 2022, China’s economy grew 3 per cent, missing its growth target of around 5.5 per cent – the first time it had failed to hit its stated goal by such a significant margin – owing to the damage from the country’s zero-Covid policy, which was lifted only in December that year.

China’s economy had also been reeling from regulatory clampdowns on its formerly high-flying sectors of education, technology and, in particular, property. That made it harder for policymakers to maintain the growth momentum in the first three months of 2023.

As a result, businesses started to lose confidence in China, with residents in the country also becoming more conservative in their spending after their savings took a hit during the Covid-19 pandemic.

In 2023, the Chinese economy grew 4.5 per cent between January and March, from the same period a year ago, before going on to expand 6.3 per cent in the next three months. The quarter-on-quarter expansion, however, slowed to 0.8 per cent from 2.2 per cent in the first quarter.

Growth then picked up again between July and September, with the year-on-year figure coming in at 4.9 per cent and the quarter-on-quarter expansion hitting 1.3 per cent.

The latest figures showed that the economy grew 1 per cent in the three months to December 2023, compared with the previous quarter, with the year-on-year growth coming in at 5.2 per cent in the last quarter.

It was slightly lower than the 5.3 per cent predicted by economists polled by media outlet Reuters. The figure was in line with predictions by Bloomberg, another media outlet.

To boost growth in 2023, China had rolled out consumption vouchers, released liquidity into the market and did away with restrictions on property purchases, to stem the decline in its economy. The central bank had injected more than 500 billion yuan (S$95 billion) into the economy at least twice in 2023.