10th December 2023 – (Beijing) China is projected to achieve steady GDP growth of around 5% in 2024, cementing its position as a pillar of strength amid global economic turmoil. Although the country faces challenges like the property sector downturn, proactive government policies to stabilise the economy and unleash new growth drivers will enable China to maintain positive momentum. With prudent macroeconomic management, China is poised to continue spearheading global growth.

At a recent high-level economic policy meeting, China’s leaders analysed the economy in 2024 and arranged key initiatives to keep growth on a stable footing. The gathering highlighted the need to invigorate market vitality, contain financial risks, and boost social confidence in economic prospects. Experts said the reassuring signals will cement positive trends while tackling structural issues pragmatically. The meeting underscores China’s commitment to high-quality development that benefits all citizens. The meeting called for strengthening counter-cyclical adjustments and implementing prudent fiscal and monetary policies flexibly. China will continue optimizing its policy mix to dissolve risks while igniting internal growth engines.

With inflationary pressures muted, China has room to ratchet up proactive spending and inject stimulus through fiscal means. The country’s modest government debt levels allow space for more public investment to make up for weak private demand.

Monetary policy can also turn more accommodative to lower financing costs. Further interest rate and reserve requirement ratio cuts are possible in 2024 to unclog credit channels. The People’s Bank of China has ample tools to maintain liquidity. China will rely more on fiscal measures while leveraging monetary adjustments judiciously. This balanced approach aligns policies with economic conditions to keep growth on an even keel. Beyond macro settings, China is focused on activating new growth drivers and high-quality development. Expanding domestic consumption remains a priority. Income growth and urbanisation will unleash latent household demand.

Infrastructure building has rebounded strongly, laying the foundation to attract private investment across sectors. China is also expediting industrial upgrading centred around strategic emerging industries like new energy vehicles, renewables, and high-tech manufacturing.

By accelerating innovation-driven growth, China will increase the resilience and security of supply chains. Advanced manufacturing and services will gain momentum as the economy transitions towards more sustainable, high-value output. China remains committed to high-level opening up and strengthening trade fundamentals. Foreign investment will continue flowing into the vast Chinese market as geopolitical tensions ease. With prudent regulation, China’s financial sector will better support the real economy’s demands.

China’s once-booming property sector has been mired in a prolonged downturn, weighing heavily on the economy’s outlook. Triggered by tightening measures on speculative lending, the crisis has seen numerous developer defaults, unfinished housing projects, and plummeting home sales. With buyers reluctant to purchase properties and developers starved of cash, prices have dropped sharply. This has crushed a formerly robust pillar of growth, hurt local government revenues, and negatively impacted upstream suppliers and consumer sentiment. Reduced property construction has also slowed China’s massive steel industry while contributing to urban unemployment. Although stability has improved slightly due to government support, structural excess supply and the debt overhang point to an arduous recovery. Comprehensively resolving the property quagmire remains a monumental challenge for China’s policymakers as they chart the economy’s course in 2024 and beyond.

Housing is critical to household consumption and local government revenues. Thus stabilising the property sector is crucial. China has rolled out measures like smaller down payments, relaxed purchasing curbs, and lower mortgage rates to rekindle demand. While speculative sentiment has cooled, analysts see room for fundamental demand to recover. Ongoing urbanisation and renovation of older homes will sustain market volumes. Policy fine-tuning will prevent excessive price swings.

Comprehensively addressing local government debt is a priority. China is implementing fiscal reforms to strengthen oversight and contain contingent liabilities. Future stimulus spending will be channelled more through the central government.

Reforms will also quicken market-based debt restructuring for distressed property firms. Reasonable asset disposals will help developers repair balance sheets and adapt to a right-sized housing market. Differentiated policies can prevent systemic risks.