BEIJING (AFP) – China’s economy likely grew at its weakest annual rate for more than three decades in 2023, data is expected to show Wednesday, as a crippling property crisis, sluggish consumption and global uncertainties battered it.
A group of ten experts interviewed by AFP forecast China’s gross domestic product (GDP) to have expanded 5.2 per cent, which would represent the lowest rate since 1990, outside of the Covid-19 pandemic.
The reading would be an improvement on the three percent seen in 2022, though that year saw business activity hammered by tight health curbs designed to contain the virus.
After lifting the measures, Beijing set itself a growth target of “around five per cent” for 2023.
The return to normal life initially sparked a recovery at the start of last year but the long-awaited rebound soon ran out of steam as a lack of confidence among households and businesses battered consumption.
An intractable real estate crisis, record youth unemployment, and a global slowdown are also gearing the Chinese growth engine.
“The main challenge for China’s economic recovery still stems from the property sector,” said Jing Liu, chief economist for Greater China at HSBC.
The property sector has long accounted for around a quarter of China’s economy.
It experienced dazzling growth for two decades, but financial woes at major firms such as Evergrande and Country Garden are now fuelling buyer mistrust, against a backdrop of unfinished housing developments and falling prices.
Many Chinese have long seen purchasing property as a safe haven for parking savings, but the price drop has hit their wallets hard.
“More (Western) companies (are) reducing or maintaining current levels of investments” in China but diversifying elsewhere, said Teeuwe Mevissen, an analyst at Rabobank.
“China saw significant capital outflows” as a result, but also due to increasing its own investments abroad, he told AFP.
All of these challenges “will continue to play an important role in 2024”, Mevissen warned.
This year, China’s growth is expected to slow to 4.5 per cent, according to World Bank forecasts.
The average prediction by AFP’s pool of experts was 4.7 per cent. Beijing is expected to announce its new growth target in March.
