China’s National Bureau of Statistics on Wednesday released a series of key data on China’s economy for the year 2023. Among them, the most attention-grabbing is the year-on-year GDP growth of 5.2 percent, which is higher than the expected target set at the beginning of last year. Once again, the actual trajectory of China’s economy stands out from some external pessimistic views, criticisms, and even collapse theories, demonstrating robust resilience and potential. According to estimates based on the World Bank’s predictions for growth rates of major economies in 2023, China’s economic increment is approximately 1.5 times that of the US and around 16.5 times that of the Eurozone. China’s contribution to global economic growth is greater than the combined contributions of the Americas, Europe, and Japan, making it a leading engine for global economic growth.
From the reports and commentaries of various domestic and international media, it is evident that this figure is generally in line with, or even exceeds, market expectations. To be frank, the Chinese economy’s recovery in 2023 was not entirely smooth. The impact of the pandemic’s “scar effect” on the economy was larger than anticipated, with the real estate sector persistently sluggish. Simultaneously, the weak global economic recovery exerted pressure on trade growth, and the spillover effects of actions such as the Federal Reserve’s interest rate hikes and the appreciation of the US dollar shouldn’t be underestimated. The public, to varying degrees, have experienced the impacts of these domestic and external challenges in their micro-level perceptions over the past year.
There were once even voices of “deflation” in public opinion, and opportunistic individuals outside even seized the opportunity to chant the “collapse of the Chinese economy.” Achieving such results in this context is undoubtedly of positive significance. It not only plays a constructive role in allowing both domestic and international observers to gain a timely and clear understanding of the overall picture of the Chinese economy but also serves as the best refutation of the various unfounded theories and speculations about the Chinese economy. Furthermore, it provides a strong encouragement amid the generally lower expectations for global economic recovery this year.
In fact, based on various data released by the National Bureau of Statistics, it is evident that China’s economy underwent an accelerated transformation last year. First, the traditional “three engines” that drive the economy – exports, consumption, and investment – are undergoing significant changes in their contribution to economic growth. In 2023, the contribution rate of domestic demand, represented by consumption and investment, to economic growth reached 111.4 percent, an increase of 25.3 percentage points on the previous 12 months. However, there is also a problem of insufficient effective demand, and the combination of supply-side structural reform and expanding effective demand needs further strengthening.
Second, the structural adjustment and transformation and upgrading of economic development have been accelerating. In 2023, more than 1 trillion yuan ($140 billion) worth of “new three items,” namely electric vehicles, solar panels, and lithium batteries, have been exported, with investments in high-tech manufacturing and high-tech services growing by 9.9 percent and 11.4 percent respectively. However, we have also seen that the potential of high-tech industries to drive the national economy has not been fully realized yet.
It should be said that it is precisely in the complex and diverse process of China’s economic changes that various observations and feelings have been formed. However, for a super-large-scale economy like China, and a big ship like the Chinese economy, the most important thing is to determine if it is sailing in the right direction. In the process of the aforementioned economic development, we have already witnessed the strong potential of moving toward high-quality development. This is why the 5.2 percent figure represents the confidence that the Chinese economy can navigate the challenges this year. Now, the key is to release this potential with sufficient patience and redoubled efforts, and smoothly achieve the transformation and upgrading of the economic structure.
It can be foreseen that 2024 will also not be a smooth journey, as competition among various forces will intensify. However, what’s certain is that in the context of the global economic growth expected to slow down, the continuous rise of geopolitical risks, the onset of a super innovation cycle, and the acceleration of global green transformation, China’s overall macroeconomic and policy direction is the clearest and most stable among all major economies. We will seek new growth driving factors through tech innovation, transformation and upgrading, continuously increasing investment in areas such as digital economy, artificial intelligence development, and green technology, while continuing to exert the policy effects of stabilizing growth. The resilient Chinese economy will provide the world with certainty and stability.
