Despite the recent wave of disappointing economic news, China is well-positioned to grow by 5% in 2024. By implementing expansionary fiscal and monetary policies and pursuing meaningful reforms, it could reverse its decade-long economic slowdown and maintain robust growth for years to come.
BEIJING – The start of 2024 has been marked by a wave of increasingly pessimistic forecasts for China’s economy. While the Chinese government remains optimistic, the International Monetary Fund projects that GDP growth will slow to 4.6% this year, from 5.4% in 2023. Meanwhile, the Chinese stock-market rout is expected to continue after share prices fell to their lowest level in five years.
But China’s economic prospects are brighter than they appear. While the government has yet to publish its own outlook for 2024, most Chinese economists expect it to set an annual growth target of 5%. Given China’s better-than-expected economic performance in 2023, I believe that 5% growth is both necessary and feasible.
Consumption was the main driver of Chinese growth in 2023, accounting for 82.5% of the increase in GDP. The Chinese government has not released its final consumption figures, but retail sales of social consumer goods serve as a useful proxy. Such sales increased by 7.2% last year, reflecting a recovery in consumer spending after a dip in 2022. But sustaining this growth momentum seems unlikely, and many Chinese economists expect a significant consumption slowdown in 2024.
BEIJING – The start of 2024 has been marked by a wave of increasingly pessimistic forecasts for China’s economy. While the Chinese government remains optimistic, the International Monetary Fund projects that GDP growth will slow to 4.6% this year, from 5.4% in 2023. Meanwhile, the Chinese stock-market rout is expected to continue after share prices fell to their lowest level in five years.
But China’s economic prospects are brighter than they appear. While the government has yet to publish its own outlook for 2024, most Chinese economists expect it to set an annual growth target of 5%. Given China’s better-than-expected economic performance in 2023, I believe that 5% growth is both necessary and feasible.
Consumption was the main driver of Chinese growth in 2023, accounting for 82.5% of the increase in GDP. The Chinese government has not released its final consumption figures, but retail sales of social consumer goods serve as a useful proxy. Such sales increased by 7.2% last year, reflecting a recovery in consumer spending after a dip in 2022. But sustaining this growth momentum seems unlikely, and many Chinese economists expect a significant consumption slowdown in 2024.