Reasons that are "eroding" China's economic growth momentum

The Chinese economy is predicted to record its lowest growth rate in over 30 years in 2023.

2023 could be China's weakest year of growth in decades. (Source: China Daily)

This is due to the crisis in the real estate sector, weak consumer activity, and global uncertainties.

In an interview with AFP , a group of 10 experts predicted that China's Gross Domestic Product (GDP) would grow by 5.2% in 2023, the lowest rate since 1990, excluding the Covid-19 pandemic period.

The aforementioned growth rate represents an acceleration compared to the 3% in 2022, a time when business activity was hampered by restrictions to prevent the spread of the disease.

Following the lifting of these measures, the Chinese government set a target of around 5% economic growth for 2023. Initially, the return to normal life provided momentum for recovery at the beginning of the year, but this recovery soon lost momentum as a lack of confidence among households and businesses cast a shadow over consumer activity.

In addition, the prolonged crisis in the real estate sector, record-high youth unemployment rates, and the slowdown of the global economy have also eroded the growth momentum of the world's second-largest economy.

Amid an uneven economic recovery, the service sector has benefited, as consumers return to restaurants and tourist destinations. However, spending remains lower than in 2019, before the Covid-19 pandemic.

Another rare bright spot in the economy is the subsidized automotive sector. The electrification wave has backed domestic automakers, such as BYD, which dethroned Tesla as the world's best-selling electric car manufacturer in the fourth quarter of last year.

Teeuwe Mevissen, an analyst at Rabobank, warns that these challenges will continue into 2024.

The World Bank (WB) says that China's economic growth is projected to slow to 4.5% this year.

Meanwhile, experts surveyed by AFP news agency gave an average forecast of 4.7%. China is expected to announce its new growth target next March.

Source: https://baoquocte.vn/nhung-ly-do-dang-bao-mon-dong-luc-tang-truong-kinh-te-trung-quoc-257510.html