China recently announced that its economy grew by 5.2% in 2023, a significant recovery on 2022’s 3%.6 There are hopes that this giant economy can maintain the momentum in 2024 by pushing past the headwinds of previous years to reach a new normal.
“A soft landing for the property sector and resilient consumption are just some of the key macro themes that will benefit the Chinese economy over the rest of the year,” said Jing Liu, Chief Economist, Greater China, HSBC. She forecasts a 4.9% increase in China’s GDP for 2024.
Real estate continues to be a key focus for the Chinese economy. Sales of new homes remain depressed, but there are signs of green shoots, as second-hand home sales picked up in large cities following easing in the commercial housing market. Last year, Beijing, Guangzhou, Shanghai and Shenzhen all reduced the down payments required for mortgages.
On the consumption front, strong spending could buoy the broader economy, as expenditure grew significantly faster than disposable income last year. Consumption is currently skewed towards services and catering, due to pent up demand for experiences during the pandemic, while property-related goods lag – a reflection of the subdued property market.
While China will play a key role in Asia’s financial fortunes in 2024, the region will also be powered by other economic engines. The region’s other giant economy, India, looks likely to have another year of strong growth, while ASEAN will continue to develop trade ties internally and with the rest of Asia. In short, the outlook at the start of 2024 is broadly positive, with the Year of Dragon likely to be a significant period of transition for Asia.