China Economic Future: China’s top leaders, including President Xi Jinping, convened behind closed doors on Monday for the annual Central Economic Work Conference. The closed-door meeting aims to set economic targets and strategize stimulus plans for the world’s second-largest economy in 2024. Sources suggest the conference, closely watched by investors, is likely to conclude on Tuesday.
As China grapples with challenges such as a deepening housing crisis, concerns over local government debt, slowing global growth, and geopolitical tensions, the conference holds significance for outlining the policy and reform agenda for the coming year. The Politburo, a key decision-making body of the ruling Communist Party, recently indicated a commitment to moderately strengthening fiscal policy, describing it as “flexible, moderate, precise, and effective” to support economic recovery.
Despite earlier policy support measures yielding modest results, there’s growing pressure on authorities to implement more significant stimulus measures. Government advisers have hinted at recommending economic growth targets for 2024, with expectations ranging from 4.5% to 5.5%. A consensus seems to favor a target of around 5%, aligning with this year’s goal. An anonymous policy insider emphasized the need to escalate policy support for the economy.
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While the state council did not provide immediate comment, analysts at Citi anticipate China to set a fiscal deficit target of 3.8% of GDP. This projection includes an additional 3% of GDP through 1 trillion yuan in special treasury bonds and a special local government bond quota of 3.8 trillion yuan. Moody’s recent downgrade warning on China’s credit rating highlighted concerns about the costs associated with resolving local government and state firm debts, along with managing the property crisis, impacting the country’s growth outlook.
Although key economic targets will likely be endorsed during the meeting, the formal announcement is expected during China’s annual parliament meeting in March. As China aims to meet its growth target of around 5% this year, the closed-door deliberations set the stage for navigating a complex economic landscape in the year ahead.”
Our Reader’s Queries
What is the prediction for the Chinese economy?
The World Bank recently released a report predicting a decline in China’s economic growth. While the country experienced a range of growth rates in recent years, from 2.2% in 2020 to 8.4% in 2021, the forecast for this year is 5.2%, which is expected to slow down to 4.5% next year and 4.3% in 2025. This news comes after Friday’s report, which further highlights the economic challenges that China may face in the coming years.
Is China’s economy going up or down?
The second quarter saw a significant increase in growth, with half-year GDP growth reaching 5.5 percent compared to the same period in 2022. The second quarter alone recorded a year-on-year GDP growth of 6.3 percent, the fastest quarterly growth rate since the second quarter of 2021.
What is the economic outlook for China in 2024?
China’s economic outlook for 2024 is expected to be tougher than the previous year. The government is likely to set a 5% GDP growth target, but achieving it may prove to be more difficult than in 2023. This is because the comparison will not be against a year affected by Covid-19, which may have artificially boosted growth in 2023.
What is the economic outlook for China in 2025?
China’s growth is projected to reach 5.2% this year, but is expected to decline to 4.7% in 2024 and 4.2% in 2025. This is due to the persistent challenges in the real estate industry and the sustained high rates of household savings.