BANGKOK — The growth of China’s economy for 2023 is higher than previously estimated, but this adjustment has not changed the government’s projections for an approximate 5% Gross Domestic Product (GDP) growth this year, as stated in a recent announcement.
The revised GDP estimate for China, the world’s second-largest economy, increased by approximately 2.7%, bringing the total to 129.4 trillion yuan (equivalent to $17.7 trillion). This revision comes from a national economic census conducted every five years. Earlier in the year, the government had estimated the GDP for 2023 to be 126.06 trillion yuan.
While the specific impact on annual growth for 2023 has not been provided, officials have indicated that additional information will follow. According to prior estimates, the economy expanded at an annual rate of 5.2% in 2023, a significant recovery from a mere 3% in 2022.
In comparison, the U.S. economy in 2023 was valued at $27.36 trillion. This census also took into account years heavily affected by the COVID-19 pandemic, which disrupted business operations, travel, and daily life across China. The economy continues to rebound from these challenges, as well as the significant downturn in the housing market due to stricter borrowing regulations placed on property developers.
In response to slowing consumer spending and business investment, the Chinese government has intensified its efforts to mitigate these issues, reaffirming plans to increase spending and issue more bonds to provide support to local governments significantly impacted by the property crisis.
Recent reports from the World Bank indicate these measures are yielding some positive effects, as they upgraded their estimate for China’s economic growth this year to 4.9%, improving slightly from the June forecast of 4.8%. Additionally, the World Bank revised its prediction for China’s growth in 2024 upward to 4.5% from a prior estimate of 4.1%, although it anticipates a slowdown in growth in the following years, with projections indicating a 4% expansion by 2026.
The ongoing challenges in the property sector continue to hinder growth, as homeowners facing declines in property value are likely to remain cautious in their spending habits. This circumstance contributes to low inflation rates, projected at 0.4% for the current year, rising to 1.1% by 2025.
While the government is implementing various measures to stimulate demand—such as reducing mortgage down payments and interest rates, investing in affordable housing, and subsidizing car and appliance recycling programs—experts believe these actions may not be sufficient to reinvigorate growth to more robust levels.
Concerns also exist around potential increases in tariffs on Chinese exports to the U.S. with President-elect Donald Trump assuming office. This, along with other trade restrictions, poses risks to the economy, especially considering China’s increasing dependence on exports for economic growth.
Moreover, the World Bank highlighted the need for improvements in China’s social safety net and measures to address growing inequality. These steps could solidify a more stable economic foundation for the country’s vast population, which includes millions of low-income individuals and those within the “vulnerable middle class,” who are at risk of reverting to poverty.
