China’s economy grew by 5.2% in 2023, slightly exceeding the official target. However, the recovery was not as strong as expected by many analysts and investors. There is a deepening property crisis, mounting deflationary risks and tepid demand, which casts a shadow over the outlook for this year.
Expectations for a strong post-COVID bounce in the world’s second-largest economy quickly fizzled as weak consumer and business confidence, mounting local government debts, and slowing global growth weighed heavily on jobs, activity, and investment.
China Beige Book International’s latest survey, released on Wednesday, stated that “the recovery from COVID–disappointing as it was–is over.” The private data collector said that any true acceleration this year would require either a major global upside surprise or more active government policy.
Despite a flurry of government support measures, a slew of economic readings early on Wednesday indicated that it lost more momentum heading into the new year. The National Bureau of Statistics (NBS) data showed that gross domestic product (GDP) grew by 5.2% in October-December from a year earlier, quickening from 4.9% in the third quarter but missing a 5.3% forecast in a Reuters poll.
However, on a quarter-by-quarter basis, GDP grew by 1.0%, slowing from a revised 1.5% gain in the previous quarter. Some December indicators released along with the GDP data were more grim, suggesting that the country’s protracted property crisis is deepening despite government efforts to prop up the sector. Other data for last month showed that retail sales growth slowed and investment remained tepid, with only industrial output showing some signs of improvement.