Economic Growth On Track for 2024
At the annual Central Economic Work Conference in Beijing on December 11-12, Chinese leaders outlined steps the government will take to steer the country’s economy toward greater efficiency and higher quality in 2024.
In addition to emphasizing the overarching principle of pursuing progress while ensuring stability as in previous years, the meeting stipulated consolidating stability through progress and ensuring new drivers of growth are well established before old ones are phased out.
These policy statements stem largely from China’s current economic environment. Still recovering from the effects of three years of COVID-19, the Chinese economy now has a fine line to walk as it confronts challenges such as troubles in the property market and local government debts. Externally, regional conflicts and trade protectionism are also impacting supply chains and exports. Against this backdrop, the tone set at the meeting showed China’s determination and confidence.
For years, the Chinese economy relied heavily on exports, infrastructure investments and particularly the real estate industry. The new double development dynamic, also known as dual circulation, reorients China’s economy by prioritizing the role of the domestic market (“domestic circulation”) in driving growth, while remaining open to international trade and investment (“international circulation”). It calls for industrial upgrading, technological breakthroughs and consumption upgrading.
The new principle that economic stability should be maintained through high-quality development indicates that technological innovations and upgraded consumption such as smart homes, recreation and tourism will play a major role in China’s economic growth. Also, the transition to a new growth model should be achieved gradually while managing risks.
Take real estate for instance. Regulatory measures aimed at cooling the investment frenzy, in combination with the effects of COVID-19, are be
nd lieved to have exacerbated difficulties for real estate developers, with some defaulting on debts. To alleviate these difficulties, the Central Economic Work Conference urged active and prudent efforts to defuse risks in the property sector. An official statement issued after the conference said the reasonable financing needs of real estate enterprises of different ownerships—regardless of whether they are state-owned enterprises or private companies—should be met equally, and the building of a new development model for the real estate sector should be accelerated. It also listed affordable housing, public infrastructure for both normal and emergency uses and the renovation of urban villages, aging villages that have been enveloped by growing cities, as three major construction priorities.
The conference also emphasized China’s commitment to high-level opening up. The statement said efforts should be made to foster new drivers of foreign trade, consolidate the overall performance of foreign trade and foreign capital, and expand intermediate goods trade, services trade, digital trade and cross-border e-commerce export.
In addition, requirements for market access in telecommunications, medical care and other services industries will be eased. Efforts will be made to align with global high-standard economic and trade rules and resolve issues concerning cross-border data flow and equal participation in government procurement.
Despite fluctuations, the upward trend in the Chinese economy remains unchanged. According to the National Bureau of Statistics, total retail sales of consumer goods increased 7.6 percent in October year on year, a marked rebound of consumption. Profits of leading industrial companies—those with an annual turnover of at least 20 million yuan ($2.9 million)—climbed for the third month in a row. In the first three quarters of 2023, China’s GDP grew 5.2 percent year on year. Given these developments, the 5-percent economic growth for 2023 predicted early this year is within reach.
On November 7, the International Monetary Fund revised up its forecast for China’s economic growth in 2023 and 2024, signaling its optimistic outlook on China’s economy. This latest conference provides an additional reassurance to the world.
Efforts will be made to resolve issues concerning crossborder data flow and equal participation in government procurement