China’s economy grew at a rate of 5.2% in 2023, failing to return to the same growth of around 6% year-over-year that was common before the COVID-19 pandemic, according to The Wall Street Journal.

The year’s growth was an improvement on the even worse growth in 2022, which totaled just 3% for that year, and economists expect similar sluggish growth in 2024 unless a big policy change occurs, according to the WSJ. A number of different indicators added to the dismal report, including real growth in urban disposable income, which grew at just 4.8% in 2023 and was the lowest year since 2002, barring 2020 and 2022.

Other indicators, like consumer confidence, which plays a big part in consumption and boosts economic growth, were poor, with consumer lending showing sluggish growth and house prices falling even lower, according to the WSJ. China did show modest improvements in investment, which had been declining for several months, while growth in outstanding debt and equity finance rose at the fastest pace since May 2023.

China has taken a number of actions to help boost its struggling recovery, including injecting liquidity into its system using special lending facilities, with the People’s Bank of China delivering the equivalent of $111 billion to the country’s banking sector, according to the WSJ. The cash injection could alleviate pressure on the country’s heavily indebted property sector.

Companies responsible for around 40% of Chinese homes have defaulted on their debt since 2021, with top Chinese developers Evergrande and Country Garden nearing default as well. Top wealth manager Zhongzhi Enterprise Group declared bankruptcy in January due to its heavy investments and resulting debts in the country’s once-booming real estate market.

Accompanying the growth numbers, China also published youth employment data for the first time since June, when the rate hit a record high, prompting the country to suspend its release, according to The Associated Press. The metric, which was measured at a 14.9% jobless rate for people between 16 and 24, uses a new method of calculation that excludes students, lowering the total rate.

Will Kessler on January 17, 2024

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