Outlook 24: controlled descent

Like a skilled scuba diver, the challenge for Chinese policymakers in 2024 will be executing a controlled descent as they manage a slowdown in the region’s largest economy.

ANZ Research expects the Chinese economy to continue to cool in 2024. China’s gross domestic product is forecast to rise by 4.2 per cent, higher than many other economies, but considered low by Chinese standards.

It’s worth remembering China is still a developing economy, with a GDP per capita of just $US13,000. Job creation is a focus, with youth unemployment an ongoing challenge. The number of college graduates in the region will be more than 11 million in 2024, and these young people are the key population segment supporting consumption – an important factor for sustainable economic growth.

While the rest of the world works to curb inflation, deflation is one of the biggest risks for China in 2024. The Chinese property market is struggling and is unlikely to rebound meaningfully this year. Household spending is already cautious.

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However, our view on China is not one sided. We do see some positive aspects of the economy. In fact, 2024 is likely to be a better year compared to 2023.

Chinese economic policy is becoming more straightforward, in terms of policy measures, and authorities are very committed to supporting growth. There is a clear objective to maintain financial stability, which is positive.

China remains committed to opening its economy, with strong ties to its trading partners including Australia and New Zealand.

China will soon become a $US19 trillion-dollar economy, and every year creates $US750 billion in global trade. A stable China is a critical buffer for the global economy, especially in Asia-Pacific region.

Raymond Yeung is Chief Economist, Greater China at ANZ