Updated Jan 17, 2024 - Economy

How China's economy is faltering on multiple fronts

The freight yard of Nanjing Railway Station in Nanjing, Jiangsu, China. Photo: Costfoto/NurPhoto via Getty Images

The world's second-largest economy is in a different position than much of the rest of the globe: It's trying to stir up demand to blunt slowing growth and falling prices.

Why it matters: The economy rebounded from the 3% growth in 2022, which came as a result of its zero-COVID policy that stymied the economy.

  • China grew 5.2% last year, the government said — "higher than the 'around 5%' target set at the beginning of last year," Chinese Premier Li Qiang said at the World Economic Forum.
  • But the figure comes as economists warn that China's economy is faltering — with uncertain consequences for the rest of the world.

What to watch: Other economic data shows weakening demand in what has been the world's powerhouse for growth.

  • Data out last week showed prices across the Chinese economy continued to fall for the third straight month in December.
  • Home prices and property sales also declined rapidly, a sign of the weakening property sector that had once fueled its growth.
  • The government also resumed publishing its youth unemployment rate: As of December, the jobless rate for people ages 16-24 was nearly 15% (down from the last published figure of 21% in June).

The bottom line: "The recovery clearly remains shaky," analysts at Capital Economics wrote in a note. "While we still anticipate some near-term boost from policy easing, this is unlikely to prevent a renewed slowdown later this year."

  • "Although the government met its 2023 GDP growth target of 'around 5.0%', achieving the same pace of expansion in 2024 will prove a lot more challenging," they added.
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