IMF and China’s 2024 economic growth forecast to 5%
Following the announcement of China’s economic growth rate at 5% in the first half year of 2024 by the “National Bureau of Statistics”, the IMF raises China’s 2024 economic growth forecast to 5%. This step indicate many expectations of the Chinese economy, regarding China’s 2024 GDP growth target of 5% for the current year reflects a measured approach to economic development, with China recognizing the need for sustainable growth. Achieving this goal may require additional stimulus measures within China’s national economy.
The most important broad outlines of the Chinese leadership to stimulate the rate of economic growth within China in 2024 are to work on the necessity of transforming the existing development model to address issues such as the real estate crisis, local government debt, and weak consumer demand. This would stimulate economic growth rates to a higher level. This goal is in line with China’s 14th five-year plan.
Here comes the Chinese focus on attracting long-term investments and addressing deep-rooted issues in the stock market, in line with efforts to revive investor confidence and achieve stability in financial markets within China.
The International Monetary Fund expected the Chinese economy to grow by 5% in 2024, after a “strong” performance in its first quarter, an increase from its previous estimates that indicated a growth of 4.6% in China, and the International Monetary Fund now expects China to be the second economy largest in the World: China’s national economy will grow by 5% during the current year 2024.
Over the past three decades, the Chinese economy has been characterized by exceptional growth rates that have established the country’s position as the second largest economy in the world. However, recent years have witnessed radical transformations that have cast a shadow on the path of this economic giant, as a result of the pandemic and the subsequent “Zero Covid” policy that imposed strict restrictions on economic activity.
This coincided with the slowdown in global economic growth, and the worsening crisis in the real estate sector, one of the most important drivers of the Chinese economy, not to mention the accumulation of debt by local governments and weak consumer confidence. In the midst of these challenges, the Chinese government initiated a package of stimulus to support the economy, which included major sectors such as real estate and infrastructure.
Positive indicators began to appear in some economic data, indicating signs of recovery in the Chinese economy.
Data from the (General Administration of Customs in Beijing) showed that the country’s exports grew faster than expected in May 2024, as exports rose by 7.6 percent in May compared to the same period last year 2023 in dollar terms, exceeding all expectations of 5.7 percent, but imports rose by 1.8 percent during that period.
In April 2024, China’s exports rose 1.5 percent year-on-year, while imports rose 8.4 percent. In the first five months of the year, exports rose by 2.7 percent compared to last year, while imports rose by 2.9 percent.
The rise In Chinese exports is a fundamental driver and driver of the Chinese economy, and recent export data is a very important indicator of the strength and growth of the country’s economy despite geopolitical trade pressures.
The rise in Chinese exports to Southeast Asia comes in a shift of Chinese goods from the European and American direction towards this Asian destination, which gives a new base for the Chinese economy, with the success of the stimulus and development measures taken by the Chinese authorities to address some of the weak points in its economy. This confirms China’s determination to achieve growth may exceed 5% in the current year 2024, which prompted the International Monetary Fund to raise its forecast for the growth of the Chinese economy to 5%, i.e. the same number that the Chinese government had previously planned.
As for my personal expectations as an expert in Chinese political affairs regarding the Chinese economy, I expect a significant increase in economic growth rates in China in 2024, especially with a strong start to this year, with confidence in the ability of the Chinese economy to achieve the annual growth target set at about 5%.
When we shed light on the rate of the main indicators in China, we will find that the proportion of China’s exports increased by about 10% in the first two months of 2024, and medium and long-term bank loans increased by more than 30%.
We find that during the annual session of the National People’s Congress of China, which is the country’s legislative body governed by the ruling Communist Party led by President Xi Jinping, broad outlines of China’s social and economic policies for the year 2024 were presented. This year 2024, the focus of Chinese lawmakers in their meetings was To increase interest in projects (scientific and technological innovation, integration between urban and rural areas, food security, and energy security), while acknowledging the challenges ahead. But at the same time, they emphasized the enormous potential in demand for construction in these vital areas.
To support the ambitious goals, Chinese economic leaders are exploring several policy tools, such as: the potential use of measures such as (reducing reserve ratio requirements to inject liquidity into the Chinese market). In addition, Chinese officials highlighted a plan to deploy 1 trillion yuan ($140 billion) in long-term special bonds to boost industries and technologies, especially in clean energy.
Taking into account the importance of China’s large market for modernizing factory equipment, estimated at about 5 trillion yuan ($694 billion), which indicates China’s commitment to modernizing its manufacturing capabilities.
In order to boost exports, China aims to promote higher-value products, support small and medium-sized enterprises in the world, and tap global markets more to stimulate consumer spending, tax policies and incentives will be planned to encourage households to replace old vehicles, upgrade appliances, and redesign their homes, which will reflect the shift towards a consumption-led growth model.