Investing.com-- China’s economy grew slightly less than expected in the fourth quarter amid consistent pressure from weak spending and a property market decline, although growth for 2023 managed to just edge past government targets.
Gross domestic product grew 5.2% year-on-year in the three months to December 31, data from the National Bureau of Statistics showed on Wednesday. The reading was weaker than expectations for growth of 5.3%, but picked up from the 4.9% seen in the prior quarter.
GDP grew 1% quarter-on-quarter, as expected, but slowed from the prior quarter’s reading of 1.3%.
This brought the overall GDP for 2023 to 5.2%, slightly above Beijing’s 5% forecast. While growth picked up sharply from the dismal 3% seen in 2022, the stronger figure was also driven by a lower base for comparison, given that country was still grappling with the COVID-19 pandemic until early-2023.
Wednesday’s figures indicated that the world’s second-largest economy was still struggling to stage a more pronounced recovery from three years of lockdowns, as a post-COVID rebound largely failed to materialize in 2023.
Slowing consumer spending, a property market meltdown and limited government support were the key headwinds faced by the Chinese economy through 2023. While Beijing consistently rolled out liquidity measures to boost spending, a lack of targeted, fiscal measures inspired little confidence.
The government had in October outlined a massive 1 trillion yuan bond issuance to spur infrastructure spending. But any more debt issuances are expected to be limited, given that the country is also grappling with overheated debt levels.
While the People's Bank of China has consistently carried out liquidity injections to support the economy, it has limited headroom to loosen monetary conditions further. The bank had earlier this week unexpectedly kept medium-term lending rates unchanged, ducking market expectations for a cut.
Chinese stocks tumbled after the GDP reading, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes losing 1% and 0.8%, respectively.
December data continues to underwhelm
Readings for December showed that economic weakness was likely to extend into early-2024, as the economy remained in deflation, while factory activity failed to recover.
Other data on Wednesday showed industrial production grew 6.8% year-on-year in December, beating estimates of 6.6%, while retail sales grew 7.4%, missing estimates of 8%. While both figures appeared to show strong growth, they also benefited from a lower base of comparison.
Capital spending also slowed substantially during the year, with fixed asset investment growing 3% in December- remaining close to its slowest pace of growth in nearly three years.
China’s unemployment rate unexpectedly grew to 5.1% in December from 5.0% in the prior month.
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