China’s gross domestic product (GDP) growth rate reached 5.2% in 2023. Although the Chinese authorities’ target of “around 5%” growth has been achieved, the future economic outlook is not bright due to external variables such as a slump in the real estate market, sluggish domestic demand, and intensifying strategic competition between the U.S. and China.
China’s national statistics bureau said on Wednesday that China’s GDP increased by 5.2 percent in 2023 from the previous year. The Chinese government has achieved its “around 5 percent” economic growth target announced in March last year. “China’s economic growth rate will reach 5.2 percent, which meets the authorities’ target of around 5 percent,” Li Chang, the prime minister of the State Council, said at the World Economic Forum’s annual meeting held in Davos, Switzerland on the 16th.
The figure of 5.2% growth itself is not bad, but it is difficult to say that it is a good performance in that it reflects the base effect of the growth rate in 2022, which was only 3%. China grew 6-7% between 2015 and 2019 before the COVID-19 pandemic. Since then, the growth rate has been 2.2% in 2020, 8.1% in 2021, and 3% in 2022.
Currently, China’s economic outlook is not good due to factors such as sluggish consumption due to the aftermath of the COVID-19 incident, worsening the real estate economy, and intensifying strategic competition between the U.S. and China. The three-year strong COVID-19 lockdown has reduced residents’ jobs and income, reducing their spending capacity. Last year, China’s consumer price index (CPI) increased only 0.2% year-on-year. It was the lowest since 2010.
Due to overinvestment and regulations by the authorities, the real estate market, which began in earnest in 2021, is still stagnating. House prices have fallen not only in small and medium-sized cities but also in large cities. Many real estate development and financial companies, such as Country Garden and Zhongz Group, are in a state of deterioration of liquidity or bankruptcy. China’s real estate sector accounts for around 25% of the country’s total economy. Investment in real estate development, such as apartments, decreased by 9.6% from the previous year.
In addition, as the U.S.-China strategic competition intensified and the Chinese authorities strengthened their social and economic controls, trade with foreign countries decreased and foreign investment decreased. Last year, China’s exports fell 4.6% year-on-year to $3.38 trillion, while imports fell 5.5% to $2.55 trillion. Foreign direct investment in China from January to November last year was 1.40 trillion yuan, down 10% year-on-year.
