Where is the Chinese economy headed in 2024?
By George N. Tzogopoulos  ·  2024-01-23  ·   Source: NO.4 JANUARY 25, 2024

The new year has started with ongoing regional turmoil. The conflicts in Ukraine and the Middle East persist and cause uncertainty in the world economy. The Middle East crisis, in particular, has already shown some signs of a spillover effect. Attacks against vessels in the Red Sea have led some shipping companies to reconsider their trade options. 

The Chinese Government considers the Red Sea an important international route for goods and energy and "stands for protecting the safety of international sea lanes and against causing disturbance to civilian ships."

Although the China-Europe Railway Express, an extensive network of rail services that connects China with many cities in Europe, may benefit from incidents in the Red Sea to some extent, the general situation is indicative of the current instability in the international system. 

To ensure its continued high-quality development, China is trying to navigate different crises methodically. The Central Economic Work Conference, the annual gathering outlining the economic priorities for the following year, in December 2023 emphasized the need to continuously do so.

The country is now in the process of returning to normalcy after the COVID-19 pandemic and has already seen some signs of recovery over the past year.

The tourism sector, for instance, offers some useful insights here. International news agency Reuters recently reported that—according to data from China's leading online travel platform Trip.com Group—more Chinese people already enjoyed winter vacations in December last year in comparison to 2022.

By the end of this winter season, in about 1.5 months, it will likely have generated more than $75 billion in revenue.

Similarly, the outlook for inbound tourism to China is positive.

The Chinese Government has already relaxed visa restrictions for citizens of several countries.

In particular, citizens of France, Germany, Italy, the Netherlands, Spain and Malaysia can travel to China visa free for a period of up to 15 days until late November this year.

In the same vein, China and Singapore recently signed a 30-day reciprocal visa-waiver agreement. In addition, China and Thailand are expected to waive visas for each other's citizens starting in March.

On January 15, China and Switzerland agreed to take the opportunity of the 75th anniversary of the establishment of diplomatic ties next year to strengthen people-to-people exchanges. China will grant unilateral visa-free treatment to Switzerland, and the Swiss side will provide more visa facilitation for Chinese citizens as well as Chinese enterprises investing in Switzerland.

As 2023 was the first post-lockdown year for the Chinese economy, fluctuations in its course occurred.

Toward the end of the year, however, signs of improvement became evident.

The UN World Economic Situation and Prospects 2024 report published in early January estimated China's growth to reach 4.7 percent this year. Although this percentage is lower than the 5.2 percent recorded in 2023, according to the same report, it is much higher in comparison to many other economies.

Specifically, the U.S. economy is expected to decelerate from 2.5 percent in 2023 to 1.4 percent this year, whereas the EU economy is projected to grow by 1.2 percent this year—from 0.5 percent in 2023.

China is expected to continuously attempt to boost consumption this year.

According to data released by the National Bureau of Statistics, the value added of the service sector accounted for 54.6 percent of GDP in 2024. Consumption expenditure contributed 82.5 percent to economic growth last year, 43.1 percentage points higher than the previous year.

The more consumer confidence is restored, the more likely it is that these figures will continue to rise.

Stabilizing the real estate market remains a challenge, but data from the last quarter of 2023 in Beijing demonstrated a drop in the average vacancy rate.

China also plans to further support its growing digital sector and accelerate its integration with the real economy.

The objective is to advance common prosperity by facilitating the efficient usage of data in different sectors and areas. A newly established data administration will supervise the process. The focus will be on the rural population in particular, with the aim to continue to narrow the existing urban-rural divide.

This year will be one of hard work for both China's government and population. But regardless of external shocks and domestic difficulties, progress will continue and allow for a proud celebration of the country's 75th anniversary.

The author is director of the EU-China Program at the Centre International de Formation Européenne 

Copyedited by Elsbeth van Paridon

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