China’s economy would grow by an upbeat 5.3 per cent this year, according to a top government think tank, despite lingering market concerns and increasing caution from international institutions.
The Chinese Academy of Sciences (CAS) expected the world’s second-largest economy to stabilise this year in its annual economic outlook issued on Tuesday, while the World Bank maintained its 4.5 per cent projection in its latest report on the same day.
The CAS, the first state think tank to make economic projections for 2024, said China’s economy would start slow, with a growth rate of 5 per cent for the first quarter, before expanding at a faster pace later in the year.
Gross domestic product (GDP) growth this year would be driven by domestic consumption and investment – by 3.7 percentage points and 1.9 percentage points, respectively – but dragged down 0.3 percentage point by exports, the CAS report said.
However, the World Bank expected weak sentiment and heightened economic uncertainty to weigh on consumption, while investment growth would remain subdued due to continued weakness in the property sector, the Washington-based international financial institution said in its Global Economic Prospects report.
There’s still a considerable gap between the actual growth rate we’re seeing now and China’s real potential
Hong Yongmiao, director of the CAS Centre for Forecasting Science, said China has the potential to achieve a faster growth rate as long as it stabilises market expectations.
“There’s still a considerable gap between the actual growth rate we’re seeing now and China’s real potential. We must keep policies continuous and stable,” he said on Tuesday.
Fitch Ratings, meanwhile, predicted China’s growth rate would slow from 5.3 per cent last year to 4.6 per cent in 2024, calling 2023 a “temporary boost from the reopening”.
Global GDP between 2020 and 2024 is on track to suffer the worst half-decade of growth in 30 years, with 2024 expected to witness mounting geopolitical tensions, sluggish global trade and tighter financial conditions, according to the World Bank.
“Barring a major course correction, the world is headed for the weakest economic-growth performance of any half-decade since the 1990s,” it said.
