City skyline in China

China GDP Q4 2023

China: Economy picks up in Q4 but remains lackluster

GDP growth accelerated to 5.2% year on year in the fourth quarter, from 4.9% in the third quarter. The reading was slightly below market expectations of 5.3% growth. That said, a favorable base effect flattered the Q4 reading, as Covid-19 disruptions saw GDP growth slow sharply in Q4 2022. On a seasonally-adjusted quarter-on-quarter basis, economic growth moderated to 1.0% in Q4, compared to the previous period’s 1.5% increase. Over 2023 as a whole, the economy expanded 5.2%, beating the government’s conservative 5.0% target.

The services sector grew 5.3% annually in the fourth quarter, edging up from the third quarter’s 5.2% increase. In addition, the industrial sector gained steam, growing 5.5% in Q4 (Q3: +4.6% yoy). Agricultural sector growth was stable at 4.2% in Q4. Looking at data for December, industry and investment growth overshot market expectations, while retail sales were notably below expectations. Moreover, housing market data was soft: Home prices continued to fall in monthly and annual terms, and both home sales and property investment fell by double digits year on year.

Our Consensus is for annual GDP growth to slow in Q1 as the base effect turns less favorable. Despite support from a cyclical upturn in the global electronics sector and previous piecemeal stimulus measures, economic momentum will remain held back by a sluggish property sector, Western trade and tech restrictions, shaky economic sentiment and a lack of more substantive stimulus measures.

On the 2024 outlook, Standard Chartered analysts said:

“We maintain our 2024 GDP growth at 4.8%, higher than market consensus’ 4.5%. We expect the housing market and net exports to become less of a drag on the economy in H2 given likely continued policy support and a boost to global demand as the US and Europe start to lower rates. Near-term, we expect China to ease monetary policy further amid still-weak consumer confidence and a continued housing-market slowdown.”

In contrast, Nomura analysts are notably more pessimistic:

“As Beijing appears reluctant to introduce more forceful policy stimulus measures to shore up economy, we expect the current economic dip to continue into the spring of 2024. With annualized sequential GDP growth at 4.1% in Q4, we maintain our 2024 annual GDP growth forecast at 4.0%.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest X Download Fullscreen