Anrich de Jager, Head: Fixed Income
As the world’s second-largest economy, China’s growth trajectory holds significant implications for global markets and geopolitics. At the National People’s Congress in March, Premier Li Qiang outlined China’s ambitious target of around 5% economic growth for 2024, sparking both intrigue and scepticism among analysts and investors alike.
Premier Li Qiang announced at the March National People’s Congress that China will target economic growth at around 5% for 2024. Despite a higher base, this matches 2023’s target of around 5%, but it will require more stimulus to lift confidence in an economy already constrained by a property slump and entrenched deflation.
Premier Qiang himself acknowledged that “It is not easy for us to realise these targets… We need policy support and joint efforts from all fronts.” The budget is likely to boost GDP by 0.6 ppt in 2024 after the broad deficit, which combines the general public budget and government funds budget.
China’s economic performance year to date reflects robust gains in manufacturing output and capital investment against a tepid recovery in consumer spending. According to China’s National Bureau of Statistics, Chinese exports increased 32.6% from a year earlier in the first two months of this year, to 15.9m tonnes. However, the adjustment in China’s real estate sector is not over, and the property market is likely to contract for the fourth year in a row.
While supply-side stimulus and a boost in export demand has helped, consumer demand continues to face headwinds from falling property prices.
ENDS
