China Economy: The Facts
*China’s economic recovery has picked up speed in the first quarter of 2024, exhibiting tenacity and fortitude while providing much-needed stability to an otherwise unpredictable international economic environment.
*According to economists, the Chinese economy has a great potential to continue its stable development as it transitions from rapid growth to high-quality development.
*Officials stated that there is a strong basis for a stable and expanding Chinese economy throughout 2024 with the continued implementation of a number of significant reform programs and initiatives.
In the first quarter (Q1) of 2024, the Chinese economy began to pick up pace, demonstrating strength and resilience and adding much-needed predictability to an otherwise uncertain global economic scene.
China’s GDP grew by 5.3 percent in the first three months of this year compared to the same period last year, a faster rate than the 5.2 percent growth in the preceding quarter, according to figures released by the National Bureau of Statistics (NBS).
At the fourth edition of the China Economic Roundtable, an all-media talk platform hosted by Xinhua News Agency, guest speakers acknowledged the performance as a “good start” and said the nation had successfully navigated economic headwinds with an effective policy mix, putting the economy on a solid footing for stable and sound development in 2024 and beyond.
The first quarter of the nation’s economic and social progress was marked by a “stable start, a smooth take-off, and a positive beginning,” according to Li Hui, a National progress and Reform Commission official.
The first-quarter GDP growth was compared to the 5.2 percent overall growth recorded in 2023, surpassing the planned yearly increase of approximately 5 percent for this year.
According to the NBS, the economy grew for seven straight quarters, with a quarterly expansion of 1.6 percent in the first three months of the year.
The purchasing managers’ index (PMI), overseas commerce, fixed-asset investment, and other metrics all suggested that the second-largest economy in the world was beginning to recover.
March saw gains in the PMI, a crucial indicator of the health of the manufacturing and services sectors. The manufacturing sector’s PMI moved back above the 50-point threshold that separates growth from contraction for the first time since September.
Its Q1 foreign trade scale surpassed 10 trillion yuan (about 1.4 trillion US dollars) for the first time in history during the same period, growing 5% from the previous year and reaching a six-quarter high in growth.
In Q1, fixed-asset investment grew at a quicker rate as well. Strong investment growth in high-tech sectors suggests that industrial upgrading is happening more quickly.
An early-year boom in ice-snow leisure trips, spring blossom tours, soaring movie box office, and an increase in visitors to the nation’s museums are all signs that the rebound in consumption is accelerating.
China’s economic growth is also being felt on a global scale. According to the International Finance Forum, the nation continued to be a major engine of growth for the global economy last year, contributing 32% of the total growth.
“China’s economic growth has continued to propel the country to the top of the list of the world’s major economies and to serve as a vital stabilizer and growth engine for the global economy. A world of uncertainties gains stability from the nation’s steady progress, according to NBS spokesman Wang Guanhua.
An analysis of the Q1 data revealed both quantitative and qualitative growth. As long as the nation is dedicated to high-quality, innovation-driven development, steady progress will be made.
The nation is steadily moving away from a pattern of traditional manufacturing and toward high-value, high-tech enterprises. At the same time, the digital economy and green, low-carbon industries are growing rapidly.
The output of its high-tech manufacturing sector grew by 7.5 percent in Q1, up 2.6 percentage points from the previous quarter.
During the January-March period, investments in the manufacturing of aircraft, spacecraft, and equipment increased by 42.7 percent, while the creation of new energy vehicles and service robots witnessed significant gains of 26.7 percent and 29.2 percent, respectively.
The nation’s export portfolio showed structural strength in labor-intensive industries and the equipment and electronics sectors, indicating these goods’ sustained competitiveness on the global market. The steady expansion of imports of consumer products and bulk commodities is indicative of a robust and expanding domestic demand.
Additionally, it has made strides toward more sustainable and balanced growth; in Q1, domestic demand accounted for 85.5% of GDP growth.
The country’s economy is shifting from rapid growth to high-quality development, and has great potential to sustain its stable development, analysts said.
China’s officials predicted that economic recovery would be a wave-like development with twists and turns, but it has remained unequal. To counteract downward forces and solve structural issues, the nation has employed a range of policies.
This year, the nation pledged to maintain its proactive fiscal and careful monetary policies. It also unveiled a number of pro-growth initiatives, such as the issuance of ultra-long special treasury notes, the first of which would be allocated 1 trillion yuan for 2024.
The nation stepped up efforts to encourage a fresh wave of large-scale equipment renewals and consumer goods trade-ins in order to increase investment and consumption.
It is intended to expand equipment investment levels by more than 25% by 2027 compared to 2023 in a number of sectors, including industry, agriculture, construction, transportation, education, culture, tourism, and medical care.
The country put up 24 initiatives to attract foreign investment in an effort to optimize the economic environment and foster high-level opening up. It committed to reducing the number of countries on its blacklist for foreign investment and initiating trial projects to lower the bar for foreign participation in scientific and technical innovation.
Additional policy incentives have also been revealed to help a variety of sectors, including small enterprises, the silver economy, consumer finance, employment, green and low-carbon development, and scientific innovation.
In order to meet the annual growth target for this year, according to Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges, China will need to address issues like low domestic demand and real estate market adjustment while fostering high-quality development and new productive forces.
“China doesn’t need stimulus packages to grow at a faster pace. Rather, it requires policy packages focused on problem-solving and high-quality development, according to Zhang.
“With the further implementation of a series of major reform policies and initiatives, we will continue to make efforts in strengthening the real economy, promoting consumption, expanding investment and stabilizing foreign trade,” said Li Hui, adding that there is a solid foundation for a stable and improving Chinese economy throughout the year of 2024.
Shayne Heffernan
