China GDP target: “Not easy to realize”

China maintained its gross domestic product (GDP) growth target at “around 5%” for 2024, Premier Li Qiang announced during the National People’s Congress (NPC) in Beijing on Tuesday. The target is consistent with the goal set for the previous year – despite the country facing growing economic challenges.

It will be difficult to reach this goal, Li acknowledged: “The foundation for China’s sustained economic recovery and growth is not solid enough. (…) We need policy support and joint efforts from all fronts,” he said at the NPC.

In 2023, China’s economy grew 5.2%. The 2024 goal met economists’ expectations, but the consensus is that it will be harder to achieve.

“Given current details, we are sceptical that China can meet its ‘around 5%’ growth target for 2024. In our view, with potential growth likely closer to 4%, this implies that policy easing is unlikely to stop until the target is within sight,” says Louise Loo, Lead Economist at Oxford Economics.

As per ING, China’s unchanged growth target signalled that growth stability will remain a priority this year. “It will be a more challenging path to repeating 5% growth in 2024, as the base effect becomes less supportive, and as many of the boosts to the economy coming out of anti-pandemic measures will gradually wane. Real estate will likely remain a drag on the economy in 2024,” says Lynn Song, Chief Economist, Greater China, at ING. She points to weak consumer confidence and a negative wealth effect as further significant headwinds.

Goldman Sachs Wealth Management even warns to invest in China now. CIO Sharmin Mossavar-Rahmani said in a Bloomberg Television interview, “Our view is that one should not invest in China.”

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She cited several reasons for her view and highlighted the expected gradual slowdown in the economy over the coming decade. Above all, Mossavar-Rahmani pointed to a weakening in the three pillars of growth – the property market, infrastructure and exports. Uncertainties regarding China’s political direction and mixed economic data are fuelling fears about investment in the region, she said.