China’s economy to grow in 2024 as domestic consumption increases

China’s economy is poised for steady growth in 2024 as consumption and the services sector continue to recover, while the country has strengthened the competitiveness of its exports.

That’s the view of Wei Jianguo, a former vice-minister of commerce and vice-chairman of the China Center for International Economic Exchanges. He said expects China’s economic momentum to further strengthen next year as the fallout of Covid-19 fades and various stimulus policies jointly generate effects.

He said the steady economic outlook, a vast domestic market and the country’s deepening opening-up agenda would all sharpen the appeal of the Chinese market to global enterprises.

China may achieve a GDP growth of around 6% year-on-year in 2024, with consumption further recovering, investment remaining buoyed and external demand for Chinese goods improving, Wei said at the CEO: Growing with China forum, hosted by China Daily.

“Underpinning China’s exports would be the country’s growing competitiveness in high-tech sectors and electromechanical products, which would help the country counter external headwinds,” Wei added.

China’s export growth was up 0.5% year-on-year in dollar terms in November economic activity as retail sales, services activity and industrial output accelerated, official data showed.

Addressing the same event, Safdar Parvez, Asian Development Bank’s country director for China, said ADB forecasts that China’s economic growth will remain steady at 4.5% in 2024 (5.2% this year), supported by a continuous recovery of the services sector and efforts to expand domestic demand, particularly consumption.

More efforts can be made in China to attract foreign investment in high-tech sectors and improve productivity levels, Parvez said, making it an encouraging sign that China’s top leadership has stressed the importance of opening-up at recent key meetings.

The Central Economic Work Conference has called for efforts to expand high-level opening-up, including relaxing market access in telecommunications and healthcare sectors, making it easy for foreigner entities to do business, study and travel in China.

Representing the financial sector, Peter Ling-Vannerus, chief representative of SEB Beijing, said opportunities are abundant for European banks in the Chinese market regarding asset and pension management as well as transition finance. SEB is a northern European financial services group.

Yet he said there remains scope for China’s local governments to provide a more secure business environment regarding cybersecurity to attract foreign investment.

Meanwhile, economists say there is still room for the Chinese government to make macroeconomic policies stronger in 2024.

Their comments came as the annual Central Economic Work Conference, which was held in Beijing, outlined the 2024 economic agenda.

Wang Yiming, vice-chairman of the China Center for International Economic Exchanges, said macroeconomic policy will be moderately strengthened in 2024, as reflected by the conference’s emphasis on reinforcing regulation and aligning policies to stabilize expectations, growth and employment.

 

Infrastructure investment crucial

And Yang Ruilong, professor at Renmin University of China, said that infrastructure investment is a crucial driver for stimulating investment demand, and said that “there’s room for fiscal policy to bolster consumer demand”.

Regarding monetary policy, Wang said the continued stability and sustainability of credit growth are the main focuses for 2024, as low domestic price levels providing room for monetary policy to be further enhanced.

The tone-setting meeting called for efficient utilization of financial resources, emphasizing the importance of revitalizing existing loans.

Supporting technology, rural revitalization, small and micro private enterprises, and other sectors will require structural tools, Wang added. Insufficient effective demand remains a primary concern in the current economic climate.

Wang Wei, former head of the Institute of Market Economy at the Development Research Center of the State Council, said promoting consumption needs to focus on innovation, quality enhancement, structural adjustments and reforms.