China’s Fourth-Quarter GDP Growth Misses Expectations

China’s economy grew by 5.2% in the fourth quarter of 2023 compared to the same period the previous year, falling slightly short of analysts’ expectations but still meeting Beijing’s annual growth target. 

Despite the challenges posed by a prolonged property crisis, weak consumer and business confidence, and global economic uncertainties, the world’s second-largest economy achieved its 2023 growth goal.

Annual Growth at 5.2%, Supported by Low-Base Effect:

For 2023, China’s economy expanded by 5.2%, with the low-base effect from the previous year’s COVID-19 lockdowns contributing to the Growth. 

Analysts had anticipated a 5.2% growth rate, aligning with the official data from the National Bureau of Statistics.

Challenges and Economic Indicators:

China Beige Book International’s survey highlighted that the recovery from the COVID-19 pandemic was disappointing, suggesting that any significant acceleration in 2024 would require a global upside surprise or more active government policy. 

Economic indicators for December revealed that factory output growth accelerated, but retail sales experienced their slowest pace since September. 

Investment growth remained modest, and the property sector’s continued weakness weighed on the economic recovery.

Property Sector Challenges Persist:

Once a key driver of China’s economy, the property sector faced ongoing challenges, with new home prices falling at the fastest pace since February 2015. 

Property sales and new construction starts also recorded declines, reflecting the persistent difficulties in the real estate market.

Central Bank Policy and Longer-Term Concerns:

Despite market expectations for an interest rate cut, the central bank left the medium-term policy rate unchanged on Monday. 

Concerns over China’s longer-term growth prospects intensified as the country’s population fell for a second consecutive year in 2023, adding to worries about demographic trends and economic sustainability.