What prepares China for 2024 GDP growth target?

by Xinhua writer Zhang Xu

BEIJING -- China's economic performance for the first quarter of this year was unveiled on Tuesday, showing a strong start with robust growth and improved quality and efficiency.

In January-March this year, China's gross domestic product (GDP) grew 5.3 percent year on year to 29.63 trillion yuan (about 4.17 trillion U.S. dollars), while fixed-asset investment and investment in high-tech industries climbed 4.5 percent and 11.4 percent, respectively.

Also, the surveyed urban unemployment rate stood at 5.2 percent in March, down 0.1 percentage points compared with both February this year and March 2023, indicating a generally stable employment situation.

The national economy has sustained recovery momentum and got off to a good start, Sheng Laiyun, deputy head of the National Bureau of Statistics, told a press conference.

"These positive factors driving economic recovery are accumulating and strengthening, laying a good foundation for full-year growth," said Sheng.

However, amid a challenging and complex external environment, issues such as insufficient effective demand and weak social expectations linger in the country. More efforts are needed to consolidate and further the positive momentum of the economic recovery.

WELL BEGUN IS HALF DONE

In Panyu District of Guangzhou, capital of south China's Guangdong Province, the GAC Group's Aion new energy automotive factory is able to complete the assembly of a new energy vehicle (NEV) in just 53 seconds.

"Last year, GAC Aion produced and sold over 480,000 vehicles, a year-on-year increase of 77 percent. This year, we will accelerate our globalization pace and plan to expand market in Southeast Asia, the Middle East, Europe, South America, and Africa, aiming for more production and sales," said Zheng Chunqi, deputy general manager of GAC Aion.

In the first quarter, investment in high-tech manufacturing and high-tech services nationwide increased by 10.8 percent and 12.7 percent, respectively, energy consumption per unit GDP decreased by 0.1 percent, and the NEV production soared nearly 30 percent, all indicating the continued transformation and upgrading of Chinese economy.

Experts point out that the first quarter performance is significant -- a strong start can boost confidence and positively influence subsequent economic operation.

Recently, several international financial institutions have expressed optimism about China's economic prospects. Goldman Sachs raised its outlook for China's economic growth this year to 5 percent, up from its previous prediction of 4.8 percent. Citigroup also revised its forecast from 4.6 percent to 5 percent, expecting China's 2024 growth target to be achieved.

"For every one percentage point faster in China's growth, that raises on average the level of GDP in other economies in the medium term by about 0.3 percentage," said Steven Alan Barnett, senior resident representative in China of the International Monetary Fund, adding that China remains a significant engine in driving global economic growth.

Media outlets have highlighted the positive signals of China's economic statistics in the first quarter, with some describing it as "better than expected" and "a recovery in confidence."

Although there were concerns like "severe challenges" and "difficulties in achieving the targets," Ajay Banga, president of the World Bank Group, believed that the challenges facing China's economy are not unique but occurring on a global scale, noting that the path of development is never smooth.

"We have faced challenges before -- and overcome them. Together. China's remarkable journey stands as a testament to what's possible," he said at the China Development Forum last month.

SUIT THE REMEDY TO THE CASE

At the restoration project of Dashihe River in Beijing's Fangshan District that was hit by a severe flood last year, workers are busy with mixing mortar and laying bricks, with excavators and cranes moving back and forth.

"We expect to complete the project by May 31 this year," said the project director. The total investment in the project is approximately 357 million yuan, of which about 250 million yuan came from the additional government bonds last year.

The Chinese central government decided last October to issue 1 trillion yuan in additional government bonds in the fourth quarter of 2023 to support the rebuilding of disaster-hit areas and raise the country's disaster relief capabilities.

Also, an array of measures to boost growth this year have also been disclosed in the government work report, including 3.9 trillion yuan of special-purpose bonds for local governments and 1 trillion yuan of ultra-long special treasury bonds.

How to prevent and defuse risks, especially in local debt and property sector, is another hot topic.

According to the Ministry of Housing and Urban-Rural Development, a coordinated financing mechanism for urban property has been established nationwide, and a "white list" of real estate projects eligible for financing support has been issued to commercial banks.

As of March 31, among the eligible projects, 1,979 have been granted credit by banks totaling 469.03 billion yuan, and 1,247 have received loans of 155.41 billion yuan.

More work is underway to improve city-specific policies on real estate regulation, relax purchase restrictions, lower interest rates of housing mortgage, and ensure the delivery of housing projects.

Regarding debt risks and fiscal sustainability of local governments, industry insiders believe that China's government debt is to some extent exaggerated. China's government debt ratio has remained stable and is at a medium-low level in the world.

Tian Xuan, vice dean with Tsinghua University's PBC School of Finance, said that the key is to implement the policies and measures accurately, deepen reforms in key areas and industries, and improve the business environment, so as to lay a solid foundation for this year's development goals.

VITALITY, POTENTIAL MAKE TARGET ACHIEVABLE

In Sunzhuang Village of Caoxian County, Shandong Province, an express delivery center is packed with traditional Chinese attire, known as Hanfu.

"The village has over 2,600 Taobao stores and more than 200 Tmall stores (both Alibaba's online shopping platforms), and over 500 merchants on other online platforms," said Sun Xueping, the village's Party secretary.

During this year's Spring Festival, sales of Hanfu in Caoxian County exceeded 300 million yuan, and online sales in the first quarter reached 1.98 billion yuan, up by 90.8 percent year on year.

China's electricity consumption, a key barometer of economic activity, climbed 11 percent year on year to 1.53 trillion kilowatt-hours in the first two months of this year, according to the National Energy Administration.

Specifically, power consumed by high-tech and equipment manufacturing industry increased by 16.9 percent.

The central government has announced a plan in March to promote large-scale equipment upgrades and trade-in of consumer goods, as part of its efforts to boost domestic demand and support continuous economic growth, which is likely to create a market worth over 5 trillion yuan annually.

In Liuyang City, central China's Hunan Province, nearly 1,600 units in a residential compound were recently sold out, with most buyers being rural residents who have settled or would relocate in cities amid the country's urbanization process.

Zhang Heming, a resident from a town nearby, had already purchased another house in the city and now enjoys the city life. "The city provides better job opportunities and better education," he said.

Currently, China's urbanization rate is 66.16 percent, much lower than the average level of developed countries. It is estimated that for every 1-percentage-point increase in China's urbanization rate, it can stimulate about 1 trillion yuan in new investment demand and over 200 billion yuan in new consumption demand.

"The Chinese economy faces headwinds. Yet China can -- and I believe it will -- continue on its path of rapid economic development," said Jeffrey Sachs, professor and director of the Center for Sustainable Development at Columbia University.

The views don't necessarily reflect those of Qiushi Journal.