A number of international financial institutions, including UBS and Goldman Sachs, have expressed optimism about China’s growth outlook for 2024. They believe that domestic consumption will continue to recover, investment will continue to increase and exports will improve.
The International Monetary Fund forecast shows that China’s economy will increase by 5.4 percent in 2023 and 4.6 percent in 2024. UBS predicted the country’s economic growth will stand at 5.2 percent in 2023 and 4.4 percent in 2024, while Goldman Sachs predicts that Gross Domestic Product growth to be 5.3 percent in 2023 and 4.8 percent in 2024.
The country’s annual Central Economic Work Conference was held in Beijing on December 11 and 12 to decide priorities for the economic work in 2024. Chinese President Xi Jinping delivered an important speech at the conference. It was noted at the meeting that China’s economy is recovering, but there are still some challenges ahead to further revive the economy. These include lack of effective demand, overcapacity in some sectors, and lackluster social expectations.
Important progress has been made in the construction of a modern industrial system, and new breakthroughs have been achieved in scientific and technological innovation, the meeting heard. Further, reform and opening-up have been advanced in depth, and people’s livelihoods have been effectively guaranteed.
According to data from the National Bureau of Statistics, consumption is playing an increasingly important role in driving growth in China, with consumer spending contributing 83.2 percent to economic growth in the first three quarters. Meanwhile, the country’s express delivery sector has handled a record of 120 billion parcels so far this year, suggesting a return to vibrancy in consumer demand.
The tech-intensive green trio of solar batteries, lithium-ion batteries and electric vehicles have replaced apparel, home appliances and furniture to become the top drivers of China’s foreign trade. The total export value of these products jumped 41.7 percent year on year in the first three quarters of this year.
Regarding the 2024 economic work, the meeting called for efforts to pursue progress while ensuring stability, consolidate stability through progress, and establish the new before abolishing the old. It urged the introduction of more policies that will help stabilise expectations, growth and employment, as well as active endeavours to promote the transition of growth models, structural adjustment, and quality and efficiency improvement, so as to consolidate the foundation of stable and positive economic development.
Stressing that a prudent monetary policy should be flexible, appropriate, precise and effective, it called for guiding financial institutions to step up support for technological innovation, green transformation and other fields, and maintaining the stability of the RMB exchange rate at a reasonable and balanced level.
The central bank said it will keep interest rates at an appropriate level and ensure that the financing costs of the real economy are lowered steadily. It will also increase support for major national strategies, key areas and weak links, and make full use of structural monetary policy tools to beef up support for small and micro businesses, as well as scientific and technological innovation.
In order to continue promoting high-quality development, the meeting urged efforts to construct a modern industrial system with scientific and technological innovation. Efforts must be made to vigorously promote new industrialisation, develop the digital economy, and speed up the development of artificial intelligence. There is also need to strengthen applied basic research and cutting-edge research, and the dominant position of enterprises in scientific and technological innovation.
The meeting said consumption needs to be promoted from post-pandemic recovery to continued expansion. It called for efforts to cultivate and expand new consumption, develop digital consumption, green consumption and healthy consumption, as well as actively cultivate new consumption growth points in areas such as smart homes, entertainment, tourism, sports events, and trendy Chinese products.
In order to achieve high-quality development, there is need to open up the stuck points and blockages that restrict the economic cycle, and strengthen self-reliance in high-level science and technology.
The meeting said that it is necessary to accelerate the cultivation of new momentum for foreign trade, consolidate the basic structure of foreign trade and foreign investment, expand trade in intermediate goods and services, as well as exports in cross-border e-commerce.
Calling for continuing to build a market-oriented, legal and international business environment, the meeting stressed the need to effectively remove the obstacles for foreigners to come to China for business, study, and tourism, and do a good job in implementing the eight steps to support high-quality Belt and Road cooperation.
In the real estate sector, China will speed up the construction of a new model of development, and coordinate the resolution of local debt risks and stable development. Efforts must be made to actively and steadily resolve real estate risks, and meet the reasonable financing needs of different real estate enterprises, aiming to promote the stable and healthy development of the real estate market.
Stephen Ndegwa
