The leadership in Beijing has acknowledged that China is currently grappling with ‘difficulties and challenges’ in its economic recovery.
State media highlighted on Tuesday that the world’s second-largest economy is undergoing a recovery from the pandemic, marked by uneven progress.
Beijing’s central decision-makers gathered for the annual closed-door meeting, the Central Economic Work Conference, amidst China’s economic challenges, such as decreasing consumer demand and a property sector debt crisis.
‘China still has to overcome some difficulties and challenges to further revive the economy,’ top leaders, including President Xi Jinping, noted at the meeting, state news agency Xinhua reported.
At the Monday to Tuesday meeting, top officials ‘decided priorities for the economic work in 2024’ and Xi gave a speech, Xinhua said.
‘It was noted at the meeting that China’s economy has achieved a recovery,’ the report said.
And according to the officials present, ‘favourable conditions outweigh unfavourable factors in China’s development’, state media reported.
‘The fundamental trend of the economic recovery and long-term positive outlook has not changed,’ Xinhua quoted them as saying.
Last week, Xi warned the country’s economic recovery remained “at a critical stage”, and ordered measures to boost demand and “defuse” risks.
In November, exports saw a positive upturn, breaking a seven-month trend of decline. It’s important to note that this improvement is measured against a low base from the previous year, during the peak impact of stringent Covid policies.
Chinese exports, traditionally a crucial growth driver, had been on a downward trajectory since October of last year, with the exception of a brief rebound in March and April.
The surprise drop in imports for November highlighted a lack of momentum in domestic consumer activity.
Recent statistics, highlighting an accelerated descent into deflation for the country in November, contributed to a somber depiction of the economic landscape.
Officials said the decline was linked to ‘downward fluctuations in the prices of energy and food’.
Rating agency Moody’s last week downgraded the outlook on the country’s credit rating to negative from stable, citing ‘broad downside risks to China’s fiscal, economic and institutional strength’.
Beijing’s finance ministry insisted concerns about China’s economy were “unnecessary”.
Woes in the property sector another traditional engine of growth remained one of the largest sources of worry.
China’s colossal real estate industry finds itself entrenched in a severe debt crisis, as some of the nation’s prominent developers confront the daunting challenge of owing hundreds of billions of dollars and potentially facing bankruptcy.
Authorities are on high alert as concerns over debt sow distrust among buyers, leading to a sharp decline in home prices and, critically, posing a contagion threat to other sectors.
Construction and real estate collectively contribute to approximately a quarter of China’s gross domestic product (GDP).
China is targeting a growth of “around five percent” this year, building upon a low base from the previous year when the domestic economy faced paralysis due to stringent Covid restrictions.
However, Beijing confronts a challenging task in reaching that target, as authorities are pressured to provide increased support, following the issuance of sovereign bonds worth 1 trillion yuan ($137 billion) in October.