The trajectory of China’s economic growth is a topic that continues to generate much interest and debate among economists and policymakers across the board. This interest is born out of the fact that China’s economic performance comes with global implications.
China’s economic transformation from an agrarian-based society to the more urbanized and industrialized China of today is nothing short of astounding. The change witnessed in a record number of years led to rapid growth which now is the core feature of China’s economic story.
Despite negative perspectives, China’s economy in 2023, for instance, defied many odds to register a massive growth of 5.2%. It navigated many external headwinds, overcame internal challenges, and registered progress. In the face of challenges, such as the COVID-19 pandemic and the global financial crisis, the Chinese economy in 2023 showed resilience, demonstrating an ability to adapt to changing circumstances.
The country’s National Bureau of Statistics described the performance as ‘target-beating growth’. It is higher than the government’s annual target of around 5 percent and exceeds the 3 percent increase in 2022. From many viewpoints, the growth rate is solid considering all the challenges. It outpaced that of the advanced economies and demystified narratives by critics who have argued that the Chinese economy is stumbling.
As a result, the lives of its citizens have greatly improved, with millions lifted out of poverty and per capita income being raised considerably. This positive impact on lives is seen through better access to healthcare, education, and higher living standards.
The performance confirms that the fundamental trend of China’s economic recovery and long-term positive outlook is yet to change. Experts estimated that China’s contribution to global GDP growth reached over 30 percent in 2023, making it the strongest growth engine in the world. The growth is monumental given that President Xi Jinping had indicated China was going to prioritize economic stability and pursue steady progress.
The latest data from the Bureau attributes this growth to several things. Besides large-scale capital investment and rapid productivity growth, the reallocation of resources to more efficient sectors like agriculture and manufacturing are some of the key drivers of this growth.
Data also reveals that key segments of the economy, including consumption and service activity, had recovered after China adjusted its COVID-19 response mechanisms at the beginning of 2023.
Robust consumption has been thriving and helping to underpin China’s economic recovery, while the country is energetically encouraging consumer spending to strengthen one of the pillars needed to support high-quality growth. Indeed, consumption was a significant growth driver last year, contributing 82.5 percent to GDP growth, with retail sales of consumer goods up 7.2 percent year on year.
Innovation
What also ought to be appreciated in the achieved growth rate is China’s efforts to improve its economic quality with scientific and technological innovation. Improving China’s innovation and competitiveness for rapid growth is now hinged on heavy investments in science, technology, and innovation boosting its status as an economic superpower.
China’s large passenger airliner C919 has been unveiled and since its inaugural commercial flight from Shanghai to Beijing in May 2023, the airliner has garnered significant global attention, providing a promising alternative to the longstanding duopoly of Airbus and Boeing in the passenger jet market.
In addition to the C919, the Chinese-built large cruise ship completed its trial voyage, the Shenzhou spaceships are continuing their missions in space, and the deep-sea manned submersible Fendouzhe reached the deepest ocean trench in 2023.
Technological innovation has also resulted in a galaxy of domestic smartphone makers.
New Energy Vehicles
China stands out as a technological leader in the production of green technologies such as Electric Vehicles. In 2023, production and sales of New Energy Vehicles (NEVs) exceeded 9.58 million and 9.49 million units, surging 35.8 percent and 37.9 percent year on year, respectively.
The country surpassed Japan to become the world’s biggest auto exporter in the first quarter of 2023, thanks to its NEVs.
Further highlighting progress in China’s innovation-driven, high-quality development, high-tech products such as electric vehicles, solar panels, and lithium batteries are performing well and have become the new growth drivers for China’s exports.
The country’s top economic planner, the National Development and Reform Commission (NDRC), says it would move to optimize policies to promote NEV consumption and enhance development of the environment-friendly and economical vehicles in rural areas.
To further stimulate economic growth, the Chinese government has implemented policies such as targeted industrial policies, investment in strategic industries, and initiatives aimed at promoting innovation and technology development. The country is also making significant investments in education and research, which has contributed to the development of a skilled workforce and technological innovation.
Unique cultural appeal
China is also leveraging its unique cultural appeal. Cultural and tourism authorities across the country are currently competing to woo visitors. These initiatives are bearing fruits. The tourism revenue figures from the just-concluded Spring Festival holiday have been staggering, further fuelling economic recovery.
135 million tourist trips made in China during the holiday, and a series of cultural events were held, with activities such as village galas, art exhibitions and cultural experiences at libraries being held. They greatly stimulated consumption.
In addition to the travel boom, China’s box office revenue also registered a stellar performance. Ticket sales surpassed the previous record earnings. From record box office earnings to bustling tourist attractions, the New Year holiday got the economy off to a strong start in 2024.
Employment and job markets
China’s central authorities have always attached great importance to people’s employment and considered the work of stabilizing employment as a strategic priority. The task of boosting employment has been prioritized and has seen the optimization of pro-employment policies.
For this reason, China now boasts the world’s largest middle-income group of more than 400 million people. Rising income levels are expected to sustainably drive consumption growth in the medium to long term.
To consolidate economic recovery, China is also facilitating an environment for private and foreign firms to operate while rolling out targeted tax and fee cuts.
Opening up
Despite the rising tide of deglobalization and protectionism, China has remained committed to high-standard opening up to boost foreign investment, providing much-needed certainty and opportunities to global businesses.
As the world’s second-largest economy, the largest trading nation, and a major magnet for global investors, China, through wider opening-up, is not only pushing forward its high-quality development but also creating broad opportunities for the world.
The East Asian nation has been successful in attracting substantial foreign direct investment, which has fuelled economic growth and industrial development. Foreign companies are investing in various sectors of the Chinese economy creating win-win outcomes.
The country has adopted a series of measures to ease market access and level the playing field so that foreign companies can enjoy a better business environment in the country as well as ensure fair treatment and competition.
In the financial sector, the country has implemented over 50 financial opening-up measures in recent years, including eliminating foreign ownership limitations in the banking and insurance sectors and lowering access criteria for foreign investors.
2024 Outlook
If expert opinion is anything to go by, then China’s economy will continue to rebound and improve in 2024, especially given that the country’s long-term sound fundamentals remain unchanged.
This is underpinned by various favorable conditions, including sound economic momentum, great vitality, deepened reform and opening-up, as well as what experts described as ample policy space. This means the Chinese economy will encounter more opportunities than challenges in 2024 as factors supporting its growth are converging.
Already, a report from the Chinese Academy of Sciences Center for Forecasting Science predicts that China’s economy will maintain stable growth with an expected GDP growth of 5.3 percent in 2024.
What’s more, international organizations such as the Organization for Economic Cooperation and Development and the International Monetary Fund have given China’s economic prospects a nod in 2024 and have revised their growth forecasts upwards for the world’s second-largest power.
Nations across the world benefit from a strong Chinese economy whose impact is seen through reduction in poverty levels, creation of jobs, creation of new markets, boost to innovation and technology, as well as promotion of global trade.
Eric Biegon is a Multimedia Journalist at Kenya Broadcasting Corporation.
