Source: GT Published: 2024-01-18

China's GDP expanded 5.2 percent year-on-year in 2023, higher than the target of about 5 percent set at the beginning of the year, official data showed.

In my opinion, China should set an economic growth target of 5 percent or above for 2024, as the global economy is projected to slow this year.

The reason is that the recovery of China's economy in 2023 was driven by increased consumption - that is, largely by putting existing capacity back to work. But the investment in China's economy in 2023 was not strong enough.

Fixed-asset investment reached 50.3 trillion yuan ($6.9 trillion), only up 3 percent year-on-year, according to data from the National Bureau of Statistics.

This means that, given that an economic recovery has already been taking place after the COVID-19 downturn, it is likely that capacity constraints will begin to appear unless fixed-asset investment increases during 2024.

If the rate of growth of investment increases, which is necessary if capacity problems are not to be encountered, growth of a bit above 5 percent is possible. But it is not possible to guarantee in advance that fixed-asset investment will increase - this will depend on policy.

It would be unwise to definitively set a target 'above 5 percent' - although that would be desirable. Falling below 5 percent would, however, have strongly undesirable economic and social consequences. I would therefore formulate it as '5 percent or above.'