China's 2023 economic update – last year’s data on real estate, GDP and more

This week, Premier Li Qiang spoke at the World Economic Forum’s conference in Davos about economic strategies for the nation.

China's 2023 economic update – last year’s data on real estate, GDP and more
China's Premier Li Qiang speaks during the 54th annual meeting of the World Economic Forum in Davos, Switzerland, January 16, 2024. REUTERS/Denis Balibouse

The backstory: China, home to some 1.4 billion people, is still grappling with economic challenges post-COVID. The hurdles include a property crisis, debt risks, slow global growth and rising geopolitical tensions, all of which are putting the brakes on a quick recovery. China's property market (which holds significant weight in its GDP, estimated to make up anywhere between 17-29%) has been on a rollercoaster, with property developers like Evergrande drowning in debt and defaulting on liabilities.

To revive the property sector, China introduced a 16-point plan in 2022, hoping for a boost. But, despite last year’s efforts, like rate cuts and fiscal support, the property market is still struggling, with new home prices dropping for five months straight as of November.

On another note, China's population saw a historic decline last year, raising concerns about the impact of an aging society on the economy.

More recently: On Monday, China’s central bank kept the medium-term policy rate unchanged, surprising many who expected a cut. The government mentioned pressure on the yuan as the reason.

The development: This week, Premier Li Qiang spoke at the World Economic Forum’s conference in Davos about economic strategies for the nation. He highlighted how the country had avoided rolling out big stimulus for quick growth and instead focused on boosting steady development within China. He also surprised the crowd by revealing that China’s GDP had grown 5.2% last year, which beat the country’s target of “around 5%.” This news came ahead of China’s official release of economic data, which were released in Beijing on Wednesday. But, China’s still facing some challenges in its economic recovery ahead. Here are some of the highlights from that data:

  • Although China’s GDP beat its set target last year, it slightly missed analyst estimates of 5.3%, coming in at 5.3%.
  • Property prices in major Chinese cities fell by 0.4% in December, marked by the steepest home price decline since 2015. 
  • Real estate investment fell by 9.6% in 2023, while investments in infrastructure and manufacturing went up by around 6%.
  • The nation’s statistics bureau also resumed reporting youth unemployment data, which had been paused since last year. Youth unemployment (16-24 age group) hit 14.9%.
  • Retail sales in December rose by 7.4%, a bit below expectations.
  • Industrial production beat forecasts with a 6.8% increase. 

Key comments: 

“China’s economic data continues to point at stable consumption and services, but with seemingly never-ending challenges in real estate,” said Gary Ng, senior economist at Natixis SA. “Although the macro picture looks somewhat resilient, it is increasingly a glass half-full or half-empty question for households, corporates and investors in 2024.” 

“In promoting economic development, we did not resort to massive stimulus. We did not seek short-term growth while accumulating long-term risks,” said Premier Li Qiang, according to a translation, at the conference in Davos. “Rather, we focused on strengthening the internal drivers.”

“We must effectively enhance economic vitality, prevent and mitigate risks, improve social expectations, consolidate and boost the sound momentum of economic recovery and growth,” the statistics bureau said in a release on Wednesday, “in a bid to effectively upgrade the quality and appropriately expand the quantity of the national economy.”

"While we still anticipate some near-term boost from policy easing, this is unlikely to prevent a renewed slowdown later this year," said Julian Evans-Pritchard, head of China Economics at Capital Economics.

"Although the government met its 2023 GDP growth target of 'around 5.0%,' achieving the same pace of expansion in 2024 will prove a lot more challenging."