China's First Year of With-Corona Economic Growth Rate at 5.2%... This Year's 'Dark Clouds' (Comprehensive)

Mixed Economic Indicators in December
Bloomberg Forecasts "4.5% Economic Growth Rate Next Year"

China recorded an economic growth rate of 5.2% last year, the first year of the With-Corona policy. This figure aligns with the government's initial target of "around 5%." However, this year, due to a series of negative factors such as sluggish domestic demand, a downturn in the real estate market, and local government debt issues, China's economic growth is expected to slow down somewhat.

On the 17th, China's National Bureau of Statistics announced that the country's gross domestic product (GDP) increased by 5.2% year-on-year last year. Quarterly growth rates were 4.5% in Q1, 6.3% in Q2, 4.9% in Q3, and 5.2% in Q4, respectively.

[Image source=AP Yonhap News]

The annual growth rate matches the figure Premier Li Qiang of the State Council of China stated on the 16th (local time) at the World Economic Forum (WEF, Davos Forum) annual meeting, saying, "China's economic growth rate will reach 5.2%, meeting the authorities' target of 'around 5%'." It also aligns with the expert survey forecast (5.2%) reported by Bloomberg News the previous day.

However, the prevailing forecast is that this year's economic growth rate will fall to the 4% range. There are numerous negative factors, including concerns about deflation due to sluggish domestic demand, a downturn in the real estate market, local government debt, and supply chain conflicts with the United States.

Bloomberg predicted that China's growth rate will slow to 4.5% this year. Bloomberg stated, "China is expected to set a growth target of about 5% again this year, but considering the base effect and other factors, this will be a more ambitious target," adding, "Without more aggressive stimulus measures, China's growth rate will slow to 4.5%." It further noted, "Recent data shows continuous declines in consumer prices, a slowdown in import growth, and a deceleration in lending speed," diagnosing that "all of these indicate that sluggish domestic demand will be the biggest challenge for the national economy this year."

Additionally, the real estate sector, which accounts for about 20% of China's economy, remains the biggest threat to growth this year. Wang Tao, Chief China Economist at Swiss investment bank UBS, said, "If the real estate market fails to stabilize and plunges sharply, the adjustment in housing prices could deepen, causing further damage to household confidence," and noted that it is uncertain when the key indicator of new housing starts will rebound.

Economic indicators released on the same day showed mixed results, raising concerns. According to the National Bureau of Statistics, China's industrial production in December increased by 6.8% year-on-year, exceeding the forecast (6.6%) and the previous month's figure (6.6%). However, retail sales rose by 7.4% year-on-year, falling short of the previous month's figure (10.1%) and the forecast (8.0%). The unemployment rate worsened slightly to 5.1% from 5.0% the previous month.