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China’s Central Bank Says Economy On Track To Achieve 5% Growth Target

  • China's economy is facing significant headwinds, including a struggling property market, rising debt, and weak consumer demand.
  • Policymakers are determined to achieve the annual GDP growth target of around 5%, but there is no guarantee that they will be successful.
  • A poorer performance than expected by the IMF would have a negative impact on the global economy, which is reliant on China's growth.
Beijing

China is anticipated to achieve its annual gross domestic product (GDP) growth target this year, with a focus on transitioning to a high-quality and sustainable expansion model, according to People’s Bank of China Governor Pan Gongsheng, as stated in a speech posted on the central bank’s website.

Beijing had set a growth target of around 5 percent for the current year.

However, some economists have expressed concerns that the government’s growth objective might be challenging to meet, given that the incremental policy stimulus from Beijing might not suffice to stabilize the economy.

Pan said, “Our country’s economy needs a reasonable growth rate, but more importantly, we need to achieve high-quality and sustainable development. Transforming the economic growth mode is more important than pursuing a high growth rate.”

The central bank intends to maintain reasonable credit growth, ensure adequate liquidity, and optimize the utilization of financial resources that have been underutilized, without providing specific details, Pen added.

But some economists predict that China’s economy will grow at less than 5 percent in both the current year and the following year, as the property market, once a cornerstone of the world’s growth, faces challenges.

Citigroup projects a 4.3% growth rate for 2023, while Barclays and ING anticipate a slightly higher 4.5%. Berenberg and Morgan Stanley are even more bullish, forecasting a robust 4.7% growth for the same period.

“5% is a low hurdle, and reaching it doesn’t mean that all of China’s growth worries are over,” said Robert Carnell, regional head of research, Asia-Pacific at ING.

The world’s second-largest economy has encountered difficulties following a brief post-COVID recovery, primarily due to substantial debt resulting from decades of infrastructure investment and a decline in the property market. These challenges not only pose risks to China but also to the global economy.

With a significant portion of household wealth tied to the struggling property market, along with rising youth unemployment, weak consumer demand, and the reluctance of financially strained private enterprises to invest, policymakers are confronted with a formidable task in revitalizing economic growth.

IMF projections on Chinese growth have fluctuated. A poorer performance than expected would take the bounce out of any global post-Covid rebound.

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  • Mamdouh Salameh on November 09 2023 said:
    China will achieve the target of 5% it set for its GDP in 2023 as confirmed by the Chairman of its Central Bank.

    This rate of growth is the fastest-growing among the major economies of the world and is three times bigger than the United States’ and almost thirteen times the EU’s. In fact, China’s economy grew at 6.5% in the second quarter.

    So it is high time for the Western media disinformation to stop casting doubts on China’s economic growth.

    And contrary to what the author wrongly claimed, China’s economy at GDP $33.0 trillion is the world’s largest economy based on purchasing power parity (PPP) compared with the United States’ at $26.5 trillion also based on PPP or 25% bigger.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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