China’s gross domestic product expanded by 5.2% in the fourth quarter of 2023, with the same growth rate maintained throughout the entire year.

The announcement from China’s Bureau of Statistics confirmed Premier Li Qiang’s recent disclosure at the World Economic Forum in Davos, making it an unusual pre-release of such a critical data point.

However, when excluding the pandemic years when China’s economy was closed to the world, 2023 marked the slowest annual growth rate since 1990, following the aftermath of the 1989 Tiananmen Square student movement.

Lockdown hangover

Comparatively, in 2022, China’s economy had grown by 3%, while the initial year of the Covid-19 pandemic in 2020 saw growth of just 2.2%.

The 5.2% growth rate in 2023 surpassed the government’s official target of around 5%, which came after a year of economic volatility and shifting expectations.

Maintaining a similar growth pace this year may pose a greater challenge, as policymakers have been hesitant to implement substantial stimulus packages.

FILE PHOTO: Containers are seen at the Yangshan Deep Water Port in Shanghai, China, as the coronavirus disease (COVID-19) outbreak continues, October 19, 2020. REUTERS/Aly Song

Growth target

Forecasts for China’s growth rate in the upcoming year among various global investment banks range from 4% to 4.9%. The formal growth target for this year is expected to be announced during an annual legislative session scheduled for March.

In the short term, China faces a lack of apparent growth drivers.

Export demand is weakening in anticipation of a global economic slowdown.

Chinese households, affected by years of pandemic restrictions and receiving no direct financial support from the government, have become cautious spenders due to a weak job market.

Private businesses have delayed new investments, while foreign investors are withdrawing funds from the country.

While China’s leadership is committed to cultivating new growth engines in sectors like electric vehicles and renewable energy, these initiatives may not be sufficient in the short term to compensate for job creation shortfalls and the overall decline in the real estate sector.