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Could China miss its GDP growth target in 2024?

Yuchen Li in Taipei
March 3, 2024

With a potential 5% economic growth for this year to be announced at China's annual parliamentary meetings next week, President Xi Jinping may have to sail against the winds to meet Beijing's goal.

China's President Xi Jinping (center) and other Chinese leaders at the Great Hall of the People in Beijing
The main focus of the 'two sessions' is the meeting of the National People's Congress starting Tuesday at Beijing's Great Hall of the PeopleImage: NOEL CELIS/AFP

China may face a more challenging task in achieving its economic growth target this year as the country's annual meetings in Beijing get underway on Monday.

The "two sessions" include the gathering of China's legislative body — the National People's Congress — and the Chinese People's Political Consultative Conference, an advisory body.

The events led by Chinese President Xi Jinping usually deliver major policy announcements including the gross domestic product growth target for the year.

Leading up to this year's two sessions, many analysts have expected the world's second largest economy to set the goal at 5% — the same as last year.

Beating the 2023 target with a 5.2% economic growth based on official data, China's central bank has stated in a report that "looking ahead to 2024, there is a hopeful expectation for a further improvement and recovery in the country's economy."

But compared to last year, experts have argued that this year would be much more difficult for China to surpass or even meet a 5% economic target.

Chinese Premier Li Qiang speaks at the National People's Congress
Chinese Premier Li Qiang is expected to lay out economic targets and deliver his first work report to the National People's CongressImage: Noel Celis/AFP/Getty Images

Max J. Zenglein, chief economist at Mercator Institute for China Studies, told DW that last year, China's economic growth came from a relatively low baseline in 2022.

"This year [the base] is a bit higher. So that's going to make it more difficult to achieve growth," he said.

At the end of 2022, the Chinese government finally lifted its stringent COVID-19 restrictions and opened its market to foreign countries when most of the world had already entered the post-pandemic era.

Wang Guo-Chen, a researcher from Taiwan's Chung-Hua Institution for Economic Research, also claimed that since consumption already picked up last year following the reopening, "there might be a bit of a decline" in 2024.

Many also remain pessimistic about China's economic growth this year as the country has experienced an economic recovery that has been weaker than expected.

International organizations forecast that China's 2024 GDP growth rate will likely fall between 4.5% and 4.9%, while the Chinese Academy of Social Sciences estimated the figure to be slightly higher, ranging from 4.8% to 5%.

Reality signals a gloomier economic outlook

Despite greater-than-5% GDP growth last year, China is facing a number of challenges to maintaining economic stability, from the indebted property industries to risks of deflation caused by weak domestic demand.

Xu Chenggang, a senior research scholar at Stanford Center on China's Economy and Institutions, told DW that official figures from the Chinese Communist Party normally failed to reflect reality.

"The actual situation is that the growth in 2022 was negative, and the growth in 2023 was less than 1%," he said, referring to data from different industries he has observed over the past few years.

Breaking down the statistics, Xu provided examples from key industries. Despite the strong revenue performance of sectors such as electric vehicles, lithium batteries and solar panels, they collectively contribute only 8% to China's GDP.

In contrast, Xu added, the majority of sectors, including real estate, which constitutes around one-third of the GDP, have experienced a decline.

Chinese economic slowdown overshadows Lunar New Year

The weak economic performance is also evident on a local level. According to the Reuters new agency, at least 15 out of 31 provincial economies missed their 2023 targets. When it comes to GDP growth targets for 2024, only five out of 27 local governments in China aimed for higher goals compared to 2023.

Due to the lack of credibility in China's official economic statistics, many expect a 5% growth goal for 2024 has a "more symbolic meaning" than an economy-stimulating effect.

"It would symbolically signal that the Chinese economy is not that bad and the Chinese government is capable of dealing with economic challenges," according to Liu Wan-Hsin, a senior researcher at Kiel Institute for the World Economy.

Xi aims to strike a balance between contradictory aspects

Amid the economic struggles, all eyes are now on what major policies Beijing could outline during the two sessions. But experts doubt there will be any drastic measures, as the meetings are widely considered "rubber-stamping" events.

"The two sessions have never held substantial importance," Xu told DW, adding that major decisions are rather determined by the Central Committee of the CCP.

But researcher Wang warned, without more intervention from the government in the property sector, accumulation of debt along with daily loss flow faced by some industry giants may lead to a significant wave of defaults and even bankruptcies in 2024.

In addition, new foreign direct investment into China dropped last year to the lowest level in the three years, against the backdrop of a heightened competition between Washington and Beijing.

However, Chinese authorities are unlikely to outline policies that indicate more openness toward the global economy.

For Xi, experts noted, the priority of safeguarding national security may still outweigh boosting the economy. The major challenge for him is to find a balance between the two aspects.

Last year, China revised the anti-espionage law and conducted raids on foreign consulting companies, reducing investors' confidence in the country's future economic outlooks.

Wang told DW that Xi is apparently navigating between the long-term social structure and short-term economic boost.

Kiel economist Liu added it was "essential for Xi and China to find out how to safeguard national security, but at the same time being conditionally open to private firms and foreign investors to certain acceptable degrees."

DW correspondent Yu-Chun Chou contributed to the report.

Edited by: Keith Walker