Chinese economy posts 5.2% GDP growth amid slowdown concerns

China's GDP grew by 5.2 per cent last year, higher than the government's target of five per cent amid mounting market concerns, waning investor confidence and a protracted property market slump in the world's second largest economy, according to official data released on Wednesday.

The country's GDP touched a record 126.06 trillion yuan (about USD 17.71 trillion) in 2023, according data from China's National Bureau of Statistics (NBS).

Despite external pressure and internal difficulties, China has successfully achieved the major targets set for 2023 and recorded a rebound and improvements in the economy, Kang Yi, head of the NBS, told the media here.

Kang said that at the same time, the Chinese economy faced an external environment that was increasingly complex, severe, and uncertain, and that economic growth was still facing difficulties and challenges.

Despite exceeding the five per cent target, analysts say that major challenges remain for the Chinese economy, which is still struggling to recover from the COVID-19 lockdowns.

"On top of economic growth, other requisites for a confidence boost include a stable property market, receding deflationary pressure, as well as less policy unpredictability,” Yu Xiangrong, chief economist for Greater China at Citigroup said.

Property investment, which has been a major drag on the post-COVID recovery, fell by 9.6 per cent in 2023 having dropped by 9.4 per cent in the first 11 months of last year according to the data.

Significantly the NBS, which stopped providing the unemployment data for about half a year amid concerns of shrinking job market, reported on Wednesday that the unemployment rate has dropped to 5.2 per cent.

Unofficial data projected the unemployment was above 21 per cent. The employment situation is generally stable, the NBS data claimed.

The jobless rate in the 16 to 24 age group stood at 14.9 per cent in December, the NBS said but the figure does not include those who are in school.

The exclusion would “more accurately reflect the employment and unemployment status of the youth who are in need of a job after graduation, and the whole picture of employment and unemployment of the youth from their graduation to stable work,” it said.

Speaking at the World Economic Forum in Davos on Tuesday, Chinese Premier Li Qiang sought to portray an upbeat picture of the Chinese economy saying that it is making steady progress and will continue to provide strong impetus for the world economy.

“We did not seek short-term growth while accumulating long-term risks. Rather, we focused on strengthening the internal drivers”, he said.

Li said in China, there are now over 400 million people in the middle-income bracket, and the number is expected to reach 800 million in the next decade or so.

For a growing range of products and services, the focus of consumer demand is shifting from quantity to quality, which will generate a strong driving force for upgrading consumption.

China's urbanisation rate is now more than 10 percentage points lower than the average level of the developed countries, he said.

There are also some 300 million rural migrants who are acquiring permanent urban residency at a faster pace, he said.

These will create massive demand in areas such as housing, education, medical services and elderly care.

He said that there is much room for infrastructural upgrading in urban renewal, transportation and telecommunications, among others.

Yu Xiangrong said China has pinned its hopes on hi-tech sectors to power its economic growth over the long run as it struggles to shake off heavy reliance on real estate and also counter US tech containment efforts.

The overlapping of property sector stress and the emergence of new growth engines – like technological innovation, advanced manufacturing and modernised infrastructure – means China is seeing a dual-track recovery, Yu was quoted by the Hong Kong-based South China Morning Post.

In the fourth quarter, the Chinese economy expanded 5.2 per cent year on year, and the country's economy grew one per cent, the NBS data said.

China's value-added industrial output, an important economic indicator, went up 4.6 per cent year on year in 2023, it said.