China Exceeds 2023 Growth Target with 5.2% Expansion, But Faces Challenges Ahead
China’s economy grew by 5.2% in 2023, surpassing the official target of around 5%. However, analysts have warned that the road ahead remains challenging for the country. To sustain the momentum, policymakers will need to take further action in 2024, as the beleaguered property market and tepid consumer demand are expected to continue weighing on growth.
According to Professor Albert Hu at the China Europe International Business School, repairing and restoring investor confidence and consumer sentiment has proven difficult. This underscores the challenges that officials will face in the coming year.
In a bid to boost confidence, Premier Li Qiang revealed the full-year growth figure during his address to the World Economic Forum in Davos, Switzerland. This unconventional move was seen as an effort to prop up market confidence and provide hope.
Despite doubts among economists earlier in the year, China managed to achieve its growth target. The announcement of a goal of around 5% during the country’s parliamentary meetings last March had initially been met with skepticism. However, the country’s economy grew by 3% in 2022, falling short of the target due to the damage caused by the zero-Covid policy implemented until December.
China’s economy had also been affected by regulatory clampdowns on key sectors such as education, technology, and property. As a result, policymakers faced difficulties in maintaining growth momentum.
The economy saw growth of 4.5% in the first quarter of 2023, followed by a further expansion of 6.3% in the next three months. However, the quarter-on-quarter expansion slowed to 0.8% from 2.2% reported in the first quarter. Growth then picked up again in the third quarter, with year-on-year growth at 4.9% and quarter-on-quarter expansion at 1.3%. The final quarter of 2023 saw a 1% increase compared to the previous quarter, resulting in a year-on-year growth of 5.2%.
To stimulate growth, China implemented measures such as consumption vouchers, increased liquidity, and relaxed restrictions on property purchases. The central bank injected over 500 billion yuan into the economy multiple times throughout the year.
As China moves forward, the challenges of restoring investor confidence and boosting consumer sentiment will persist. Policymakers will need to navigate these hurdles to maintain the country’s economic growth.
