Key Takeaways
- 2023 GDP growth was marginally below consensus expectations, but, at 5.2%, it expanded slightly above the government’s growth target (5%).
- That said, the reopening boost at the start of the year – combined with base effects from the lockdown- induced stress in 2022 – meant that this was an exceptionally low bar.
- China’s December data releases at least provided further evidence that policy easing to date is gaining traction, even if activity remains shaky in parts.
- The property sector remains a major concern. Key metrics now point to a continued slide, rather than the tentative stabilisation indicated a couple of months ago. A faster pace of price falls also implies that households are staying on the sidelines.
- Policy continues to ease, as illustrated by robust government debt issuance and strengthening infrastructure investment. And the rumoured ‘ultralong’ debt issuance could further loosen financial conditions.
- But the desire to hold the line on de-risking is still resulting in a targeted and incremental approach.
- The Taiwanese election at least has passed without incident (thus far anyway). The potential for the US election to usher in greater US-China risk is however another reason for investors to stay away.
We remain somewhat cautious about the Year of the Dragon and our 2024 growth forecast stays at 4.4%.
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