China sets 5% GDP growth target for 2024

BEIJING: China’s economic troubles are far from over and leaders admit the country will face an uphill struggle in hitting its goals for 2024, piling on the pressure for stimulus and reforms that experts say are needed to reverse the malaise. Beijing’s leadership on Tuesday laid out an objective of “around five percent” gross domestic product (GDP) growth this year—a dream of many developed Western nations but for China a far cry from the breakneck expansion that powered its rise.

It is also identical to last year’s GDP target—one of China’s lowest in decades even as the economy was buoyed by the country’s emergence from strict COVID rules that had stifled progress. Beijing has been upfront that it believes hitting five percent growth will “not be easy” given the “lingering risks and hidden dangers” still present in the economy.

Economists agree. “Although the growth target this year is the same as last year, it’s actually more ambitious given the higher base in 2023,” said Jing Liu, HSBC Global Research Greater China chief economist. Chief among the risks is China’s real estate sector—now under unprecedented strain with some major developers on the verge of bankruptcy and falling prices dissuading consumers.

Property in China experienced two decades of meteoric growth alongside rising living standards across the country and long accounted for more than a quarter of China’s GDP. But the sector has become emblematic of the challenges facing the wider Chinese economy—overpowered by cheap debt and roaring demand, millions of unfinished homes now lie empty.

Despite official efforts to offer fresh support, “the property sector has shown no signs of recovery”, said Ting Lu, chief China economist at Nomura. Tuesday’s government work report promised greater steps—more investment in government-funded housing, efforts to assist in the “justified financing demands” of real estate firms, and a vaguely defined “new development model” for real estate.

“The property sector will likely remain a prolonged drag on growth,” according to Lynn Song, chief Greater China economist at ING. But economists were hoping that Beijing would signal a move beyond its traditionally cautious approach to bailouts—what Chinese Premier Li Qiang this year likened to seeking “short-term growth while accumulating long-term risks”.