BEIJING - China’s economy last year grew at one of its slowest rates in more than three decades, official figures showed yesterday, as it was battered by a crippling property crisis, sluggish consumption and global turmoil. The figures were in line with expectations, and even beat Beijing’s target. But it will likely pile fresh pressure on officials to unveil more stimulus measures to kickstart business activity, and get the country’s army of consumers spending again.
China’s National Bureau of Statistics revealed that gross domestic product expanded 5.2% to hit 126 trillion yuan (US$17.6 trillion) last year. Markets in Asia fell on the news, with Hong Kong’s exchange closing down 3.7%, and Shanghai off more than 2%. The reading is better than the 3% recorded in 2022, when strict zero-Covid curbs destroyed activity, but marks the weakest performance since 1990, excluding the pandemic years.
While 5.2% would be looked on enviously by other governments such as the United States and those in the eurozone -- which each expanded around 2% in 2022 -- it is well down from the levels around 6% or 7% enjoyed in the 2010s.
After lifting its draconian Covid measures at the end of 2022, Beijing set itself a growth target of “around 5%” for last year. The economy enjoyed an initial post-pandemic rebound, but ran out of steam within months as a lack of confidence among households and businesses hit consumption.
“With investment in the property sector falling, the economy is more dependent on the manufacturing sector and service sector,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note.
Snd Teeuwe Mevissen, China economist at Rabobank, told AFP: “The main challenges for China continued to be the malfunctioning real estate sector and related to it, low levels of private consumption.”
Statistics last month showed deflation continued for the third month in a row, likely deepening consumer reluctance to spend. And exports, historically a key growth driver, fell last year for the first time since 2016, reflecting how tensions with the United States and a stuttering global economic recovery are compounding Beijing’s struggles to kick-start growth at home.
China’s GDP figures remain a key source of insight into the health of the world’s second-largest economy, despite being eminently political. Officials are due to release their growth target for 2024 in March.
Between the third and fourth quarters -- figures more reflective of the real-time economic situation -- it only grew 1%.
And December saw retail sales -- a key indicator of household spending -- slow after a rebound the previous month. Unemployment also increased slightly to 5.1% -- though the statistics effectively exclude millions of migrant workers from rural areas.
Official statistics also showed China’s population decline accelerated in 2023, extending a downward streak after more than six decades of growth as the country battles a looming demographic crisis. “What China saw last year was possibly the most disappointing post-Covid recovery imaginable,” Shehzad Qazi, managing director of China Beige Book, a consultancy firm which tracks the Chinese economy, told AFP.
“The economy limped to calendar’s end,” he said.
“Any true acceleration next year will require either a major global upside surprise, or more active government policy.”
Chaoping Zhu, at JP Morgan Asset Management, added: “Stronger fiscal stimulus are essential to support growth and market confidence.” - Nampa/AFP