SINGAPORE: China’s National Bureau of Statistics released the latest GDP and population data earlier this week. It showed that the GDP for 2023 rose by 5.2 per cent, while its population is down by 2.08 million people from the previous year.
Mr Tianchen Xu, a Senior Economist for China with the Economist Intelligence Unit (EIU), has commented on China’s latest numbers, noting that “Officials seem to ‘manage’ the 2023 growth to be lower.”
He added that a possible reason for officials to tweak the numbers “is that they may have decided on a challenging growth target for 2024 (should be 5 per cent) at a time when the situation on the ground is not that rosy. Weaker growth will raise the possibility of reaching that goal in 2024.”
Nevertheless, Mr Xu gave China’s economic performance for last year“ a “pass”. He added, however, that the economy could have gotten a higher score if the government had taken a “more forceful response to the property meltdown and greater commitment to the private sector.”
He also highlighted a positive economic development—that after China reopened, the financial conditions of the low-income group improved.
“This has injected vigour to consumption and works in favour of the common prosperity agenda,” he noted.
While the government’s economic target had been 5 per cent growth, and what transpired is higher than 2022’s 3 per cent increase, 2023’s growth is still one of the weakest economic performances in the last 30 years.
As for the coming year, the EIU expects the government to aim for a 5 per cent growth target, which they call a low-hanging fruit given China’s multiple economic challenges, particularly the continued property downturn. Therefore, fiscal expansion and public investment will be the government’s tools to reach that target.
The EIU expects China’s economy to grow by 4.9 per cent this year. This “reflects our belief that public investment will play an outsized role this year, but reliance on that could delay China’s economic restructuring again.”
Mr Xu added that whether officials can bridge the confidence deficit among consumers, private entrepreneurs, and foreign investors is one important thing to look out for this year.
Commenting on China’s population, Ms Yue Su, a Principal Economist for China with the EIU, says that 2023’s decline aligns with earlier projections.
“The sustained decrease in new births is a consequence of disruptions caused by the COVID-19 pandemic, impacting both childbirth and death rates. Given that nearly two-thirds of the babies born in the current year were conceived in 2022,” she said.
However, she said that a rebound in births may be expected in 2024 and 2025, driven by pent-up demand, which could contribute to a positive population growth trajectory again.
After 2025, there may be a downward trend as the number of women of reproductive age decreases, although a “baby crisis” like the one that South Korea is facing may be unlikely.
However, she warned that “it will be challenging for China to maintain a stable, albeit low, fertility rate comparable to Japan” if policies supporting it, including social welfare and working conditions for women, are not implemented.
Ms Su also said it is important for China to address youth unemployment, which contributes to delayed marriage and childbirth. /TISG
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