"China's Economic Growth Rate at 5.2% Last Year... Slowdown Expected This Year"

The Biggest Threat to Economic Growth This Year Is Real Estate
Government Must Increase Infrastructure Spending

Bloomberg News reported, citing internal survey data, that China's economic growth rate last year is expected to have reached 5.2%. However, it forecasted that without aggressive stimulus measures, the growth rate this year could slow to 4.5%.

On the 15th (local time), Bloomberg cited statistics from a survey of economists, projecting that China's gross domestic product (GDP) grew by 5.2% year-on-year last year. This figure aligns with the growth target set by the Chinese government last year (around 5.0%). The consensus for the fourth quarter growth rate stands at about 5.3%. The official GDP growth statistics are scheduled to be released by the National Bureau of Statistics of China on the 17th.

[Image source=AFP Yonhap News]

Bloomberg explained, "China is expected to set a growth target of about 5% this year as well, but considering base effects and other factors, this will be a more ambitious goal," adding, "Without more aggressive stimulus measures, China's growth rate is likely to slow to 4.5%." It further noted, "Recent data show continuous declines in consumer prices, a slowdown in import growth, and a deceleration in lending speed," diagnosing that "all of these indicate that weak domestic demand will be the biggest challenge for the national economy this year."

It also assessed that real estate, which accounts for about 20% of the Chinese economy, remains the biggest threat to growth this year. Wang Tao, Chief China Economist at Swiss investment bank UBS, stated, "If the real estate market fails to stabilize and plunges sharply, the adjustment in housing prices could deepen, causing additional damage to household confidence," and noted that it is uncertain when the key indicator of new housing starts will rebound.

To respond to this, there was also a diagnosis that the government needs to expand infrastructure spending. Citigroup forecasted that China's infrastructure investment growth rate will rise from 5.8% last year to 8.5% this year. Bloomberg explained, "Considering the lack of direct government subsidies to households, sluggish employment, and falling housing prices, the level of consumption recovery will be limited," adding, "Prices of items that significantly affect inflation, such as pork and energy, may rebound, but trust remains weak, so deflationary pressures will persist."

Additionally, experts predicted that the People's Bank of China, the country's central bank, is likely to take measures such as loan programs for financing public housing projects and lowering the reserve requirement ratio. Wei Yao, Chief Asia-Pacific Economist at Soci?t? G?n?rale (SG), forecasted, "The People's Bank of China will provide an additional 650 billion yuan in low-cost funds," while Sing Jiaofeng, Chief Investment Strategist at Australia and New Zealand Banking Group, said, "The recent interest rate freeze by the People's Bank of China implies a higher likelihood of a reserve requirement ratio cut in February."

This content was produced with the assistance of AI translation services.