China’s economy capable of staging relatively fast growth in 2024
Published: Jan 17, 2024 06:21 PM
The skyline of Lujiazui in Shanghai Photo: CFP

The skyline of Lujiazui in Shanghai Photo: CFP

China's economy is likely to continue running on its post-pandemic recovery track in 2024, boosted by the government's pro-growth policy accelerations, including higher fiscal spending and a looser credit environment orchestrated by the central bank to inspire corporate investment and household consumption. 

Meanwhile, rising introduction of digital solutions, AI, robotics and quantum computing will bring about higher levels of industrial automation and productivity upgrade in China, fortifying the country's economic strength. 

The policymakers still have potent policy tools to shore up economic growth. There exists some room to maneuver and stimulate the sizable Chinese economy by borrowing and spending on a wide variety of projects and services, including rural infrastructure, urban utilities, tech innovations and expansion of manufacturing plants as well as improving the country's sprawling social safety net, including the pension coverage for the retired people and better medical care for all newborns and other citizens.

The world's second largest economy expanded by 5.2 percent in 2023 from the previous year to top more than 26 trillion yuan, as it rebounded from nearly three years of stringent anti-coronavirus control measures. Compared to merely 3.0 percent rise in 2022, the 5.2-percent growth is significant and impressive, standing among the highest growths reported by the world's major economies. 

It isn't easy for the country to obtain this feat as the global economic slowdown drags on which hamstrings overseas demand for Chinese products. At the same time, the global geopolitical conflict is deteriorating, and the geo-economic situation is becoming increasing complex thanks to the US government's ruthless attempt to strangle Chinese development by launching the tariffs war and restricting Chinese enterprises' imports of American high-tech products, such as semiconductor chips.

But Chinese companies are rapidly catching up in researching and developing new technologies. For example, an estimated 65 percent of the world's new-energy vehicles and quality batteries were manufactured in China last year. More than 31.6 percent of the cars, buses and trucks sold in the market in 2023 are electric or hybrid power vehicles, and the government has set an ambitious plan to strive for 45 percent new-energy-vehicle market penetration rate in 2027. Meanwhile, China now draws more than half of its electricity output from clean renewable sources, including wind turbines, solar panels, hydropower and nuclear power stations. 

The mutually reinforcing growth of the NEV sector and the renewable green energy industry is expected to provide solid gains and new momentum for the overall economy in 2024 and beyond, and make up for the loss caused by the protracted housing market slowdown. Last year, China's manufacturing investment went up by 6.5 percent, while real estate development dropped by 9.6 percent, the National Bureau of Statistics said on Wednesday.  

It is of great importance to put an early end to the three-year housing market correction since 2021 triggered by the pandemic, as the authorities and state-owned banks are ramping up monetary support by reducing property down payments and cutting mortgage rates to encourage more people to purchase homes and stabilize the market. 

By all metrics, real estate is an important sector impacting GDP growth. If the housing prices keep dipping, more middle-class households would feel less financially secure, which may inhibit their enthusiasm to purchase other commodities. Now, all major Chinese cities including Beijing, Shenzhen and Shanghai have moved to relax prior administrative curbs on home purchases and sales, an effective way to shore up market morale. Developers are also able to have easier access to bank loans. 

Despite the US' higher tariffs imposed on Chinese imports which dented bilateral trade volume by some 9 percent last year, China's foreign trade with other major trade partners, the ASEAN and China's neighboring countries and economies in particular, held up, reaching or slightly exceeding 2022 levels. Total exports denominated in Chinese yuan last year hit the previous year's levels. It is expected global trade situation is unlikely to improve very much this year, which calls for Chinese policymakers to think of more effective ways to explore the global market. 

With regard to reinvigorating China's domestic consumption - a major force supporting economic growth, the government will continue to churn out tax reliefs and other incentives to ratchet up retail sales this year. Chinese residents were seen spending more on domestic travels, cinemas, restaurants and hotels in 2023, and big retailers seem to have finished the sale of their excess inventories they accumulated during the pandemic and have started to place new orders. 

The 5.2 percent GDP growth last year could be considered a forceful rebuttal of Western media's reckless hype of the "China collapse" narrative. Kang Yi, the commissioner of the NBS, said Wednesday that China's national economy witnessed momentum of recovery, high quality development was steadily executed, and major pre-set economic targets were achieved. As for 2024, although the government hasn't announced a growth target, most Chinese economists have confidence that the country is able to realize about 5 percent growth in GDP. 

At the Central Economic Work Conference held in December 2023, the policymakers stressed the need to expand domestic demand, noting that "efforts should be made to stimulate consumption with potentials and expand productive investment to create a virtuous cycle of consumption and investment. The development of digital consumption, green consumption and health consumption should be stepped up, and new growth levers such as consumption of smart home appliances, entertainment and tourism, sports and trendy domestic brands should be well fostered."

The Chinese economy has demonstrated remarkable resilience in 2023, as it emerged from the pandemic battering. Vehicle exports surged by 58 percent last year, as China surpassed Japan to become the world's largest vehicle exporter. Entering 2024, the Chinese economy, supported by a significant tick-up in government spending programs and possible interest rate lowering by the central bank, will keep forging ahead, acting as a major engine of the regional and global growth despite the persisting volatilities in the world. 

The author is an editor with the Global Times.