China's Growth Remains Stable: A Look Behind the Scenes

China's economy experienced stronger growth in 2023 than initially anticipated, but the forecast for the gross domestic product (GDP) remains unchanged at about 5%. Following a comprehensive economic census conducted every five years, the GDP was revised to 129.4 trillion yuan (17.7 trillion dollars), an increase of approximately 2.7% from the previous estimate. The economic census also covered the years of the COVID-19 pandemic, which caused significant disruptions in business activities and daily life in China. The country continues to grapple with the aftermath of the pandemic and the real estate market crisis, triggered by strong state interventions in excessive debt. Nevertheless, the economy shows signs of recovery: economic growth was estimated at 5.2% in 2023, a significant increase from 3% in 2022. The US economy grew to 27.36 trillion dollars in 2023. China's government is addressing the slowdown in consumption and investment through various measures to stimulate the economy, including increased bond issuance to support municipalities suffering from the real estate crisis. According to a World Bank report, these measures have proven effective. The bank has raised its growth forecast for China from 4.8% to 4.9% and expects growth of 4.5% in 2024. However, this indicates that growth will slow in the coming years. The weakness in the real estate sector remains an obstacle to growth. The loss of property values affects people's consumption behavior, leading to a decrease in inflation to a low 0.4% this year, with a rise expected to 1.1% by 2025. Measures such as lowering down payments and interest rates on mortgages or promoting affordable housing projects support demand but are insufficient to significantly boost growth. Additionally, trade barriers, such as higher tariffs on Chinese exports to the USA, could burden the economy. To strengthen the economic foundation, the World Bank recommends that China expand its social safety net and reduce social inequality.