China Shoots for 5% Growth in 2024, But It Won’t Be Easy

Beijing is feeling good about the Chinese economy. Should we? 

The Chinese government has set a growth target of 5% for 2024, the same forecast as last year. It’s a figure some analysts view as ambitious given that the country’s post-Covid economy has felt like an indefinite hospital stay. 

Last Year is in the Past

Last year was no fun at all for China. Its formerly red-hot property market began spiraling out of control — developer Evergrande was recently forced to liquidate and Country Garden could be next. Local government debt ballooned to more than $12.5 trillion. More young people than ever were out of work. And geopolitical tensions combined with restrictive security policies caused Western investment to diminish. 

The government nevertheless insisted that GDP grew 5.2% last year, although questions swirl around those numbers, which is to say hardly anyone thinks it was that high. This year looks to be paved with the same jagged boulders, possibly even more of them. Even Premier Li Qiang thinks growth won’t come easy. “We need to maintain policy focus, work harder, and mobilize the concerted efforts of all sides,” Li said in a report this week. “The foundation for China’s sustained economic recovery and growth is not solid enough.” The world appears to concur: 

• The World Bank and the International Monetary Fund expect China’s 2024 growth to reach just 4.5% and 4.6%, respectively. Moody’s Heron Lim told The Wall Street Journal, “While I disagree with the notion that China is in a broad economic crisis for now, I do agree it would take time for China to complete its economic restructuring while managing its current risks and turmoil in the property market.”
• The possible ace up China’s sleeve to achieve the desired growth is issuing special treasury bonds valued at roughly $140 billion that won’t be included in the fiscal deficit. It’s a move China has only done three other times in the past few decades, all coinciding with major economic emergencies in 1998, 2007, and 2020.

Human Rights Softball: The fixes for China’s deteriorating relations with the West are less obvious. The European Union this week agreed to ban and even destroy products made with forced labor, a move that could sow tension with Beijing, which has been accused of forcing Uyghur ethnic minorities in the country’s Xinjiang region to work in detention centers creating solar panels, producing clothes, and even building a Volkswagen factory. However, Politico reported the EU requires sufficient evidence before investigating suspected forced labor whereas in the US, which cut off imports from Xinjiang in 2022, just a reasonably credible suspicion will do.