China Achieves 5.2% Economic Growth in 2023

China’s economy grew by 5.2% in 2023, meeting the government’s official target, but concerns loom over growth momentum due to ongoing challenges. The National Bureau of Statistics reported that the gross domestic product (GDP) for the world’s second-largest economy also increased by 5.2% in the final quarter of 2023 compared to the same period the previous year.

While the growth is seen as a positive outcome, Kang Yi, the head of the bureau, cautioned that the expansion had been “hard won,” citing a complex external environment and insufficient demand as potential hurdles for 2024. China faced economic struggles in 2022, with a mere 3% growth due to prolonged COVID-19 regulations linked to its zero-COVID policy.

The protracted property crisis, sluggish consumer and business confidence, and weak global growth have weighed down the Chinese economy after an initial post-pandemic rebound. Efforts to rein in property market debts and speculation, record youth unemployment, and a global economic slowdown have contributed to these challenges.

Exports, historically a key growth lever for China, fell last year for the first time since 2016, according to customs agency figures. Geopolitical tensions with the United States and efforts by some Western nations to reduce dependence on China have also impacted growth.

Despite the challenges, Chinese Premier Li Qiang, speaking at the World Economic Forum in Davos, emphasised that China achieved its economic target without resorting to “massive stimulus.” He painted an optimistic picture of China’s situation, highlighting the country’s “good and solid fundamentals” for long-term development. Premier Li encouraged international investors to view investing in China as an opportunity rather than a risk.

However, risks persist, including concerns over China’s espionage law expansion, the unresolved issues in the property market, and the lack of jobs for the country’s youth. The population decline for the second consecutive year, coupled with a record low birth rate and COVID-19-related deaths after the lifting of zero-COVID policies, poses longer-term questions about China’s growth potential. The National Bureau of Statistics reported a population decrease of 2.08 million in 2023, deaths rising by 6.6%, and new births falling by 5.7% to a record low birth rate.