China’s Premier, Li Qiang, addressed the audience at the World Economic Forum meeting in Davos, reassuring them that the Chinese economy is equipped to manage fluctuations and that its long-term growth trajectory remains unchanged. This comes at a time when the world is facing multiple complexities, including military conflicts and the threat of a global recession.
Li’s speech included an early reveal of China’s GDP growth for 2023, which he stated to be around 5.2%, surpassing the country’s target of 5%. However, this announcement did not impress investors, as U.S.-listed ETFs following the Chinese market experienced a drop in value.
Over the past year, foreign investors have pulled $29 billion out of China’s equity market due to concerns over a crumbling housing market. The country’s real estate sector has been weakening, with home sales showing a 26% decline compared to the previous year. Manufacturing has also suffered, affecting the Yuan’s value.
A Reuters poll of economists projected China’s GDP growth for 2024 to be below 4.6%, suggesting that the country will continue to struggle with its post-COVID recovery. If these projections materialize, it could dampen hopes of a strengthening Chinese economy.
Despite these challenges, Li expressed confidence in China’s ability to handle ups and downs in its performance. He highlighted the strength of the country’s middle class, which has supported economic growth and is expected to double in the next decade, creating a substantial domestic consumer base.
Li also emphasized that China remains open to global business, despite tensions with the West and moves towards “economic decoupling” from the EU and the U.S.
Overall, while China’s GDP growth for 2023 exceeded expectations, concerns remain about the country’s future economic performance. Investors will closely watch for official figures and how China navigates its post-COVID recovery amidst various challenges.
