Despite facing difficulties in the property sector, China’s economy started off on a strong footing in the first quarter of 2024. The country’s gross domestic product (GDP) grew by 5.3% compared to the previous year, surpassing predictions of a 4.6% growth rate for the first quarter. Beijing had set an annual growth target of around 5% for the year.
However, retail sales growth fell to 3.1%, indicating a decline in consumer confidence. In order to achieve its growth target, analysts suggest that China will need to see increased household spending. Additionally, property investment dropped by 9.5% during the same period, highlighting the challenges faced by real estate firms in the country.
The ongoing property market crisis in China has had significant implications for the economy, with the sector accounting for around 20% of GDP. New home prices have fallen at their fastest rate in over eight years in March, and major property developers like Evergrande, Country Garden, and Shimao have faced challenges, with some being ordered to liquidate by courts.
Credit ratings agency Fitch has downgraded its outlook for China due to these economic challenges. At the annual gathering of China’s leaders in March, officials announced that the economy had grown by 5.2% in 2023 despite facing various challenges such as rapid expansion and rising debt levels which put pressure on inflationary risks and policy tightening measures that could impact future economic stability of China.
In conclusion, while China’s economy has historically seen rapid growth with an average annual GDP growth of nearly 10%, it now faces a range of challenges such as declining consumer confidence and difficulties faced by real estate firms that could impact its future trajectory