Some of the Chinese economic data for 2023 published on Wednesday looked like good news, with growth higher than the annual target of 5 per cent and gross domestic product reaching a record RMB126.06 trillion (€16.28 trillion). But the overall picture was disappointing as the property market slump continued to dampen consumer spending as deflationary pressures remain stubborn.
The economy grew by 5.2 per cent in 2023 but this was compared to the low base of 2022 when China was still under a strict zero-Covid regime. Investment was sluggish with fixed-asset investment growth slowing and private-sector investment falling by 0.4 per cent in 2023 after it grew by 0.9 per cent in 2022.
The property market, long a major driver of economic growth, remains on the floor with new home prices in China’s top 70 cities falling faster towards the end of the year. Property investment fell by 9.6 per cent, new building starts fell by 20.4 per cent and the value of residential property sales dropped by 6 per cent.
[ Foreign investors unwind $33bn bet on China growth reboundOpens in new window ]
China continued to lead the world in supplying some of the products essential to the green energy transition, including solar panels and electric vehicles. But economic weakness elsewhere in the world, alongside protectionist measures by the United States and the European Union, will blunt the capacity for China to export its way to a stronger recovery.
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Domestic consumption was the biggest contributor to economic growth in 2023 but the authorities have struggled to boost consumer confidence in the face of falling house prices. And although a loosening of lending rules and some other measures have sought to boost the property market, Beijing has until now resisted a major intervention to rescue developers on the brink of bankruptcy.
In a surprise move, the statistics bureau published a revised figure for youth unemployment, six months after it stopped publishing the number following a number of months when it topped 20 per cent. The latest figure for December 2023, which measures unemployment for those between 16 and 24 but excludes students, was 14.9 per cent.
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