As we all know that China’s economy has grown rapidly for more than four decades and become a key driver for the global economy for the last two decades. Additionally, we are aware that China's economy has experienced a slowdown in recent years, which is also a matter of concern. Therefore, I believe that in some ways, the role of economic experts and policymakers has become even more crucial for shaping the future of the economy.
My presentation here will be divided into three parts. First, I will analyze China's macroeconomic situation in the first three quarters of 2024. Second, I will discuss China's macro policy adjustments since last September. I will show you its impact on the economy in 2024 and 2025. Lastly, I will provide a forecast and outlook for China's economic growth in the next two years.
In the first part, we will talk about how is China’s macroeconomic going on in the last three quarters in 2024.
1. In 2
024, China’s economy continued to maintain a medium-high growth rate, with the quarterly downward pressure increasing.
In the first three quarters, China’s real GDP grew by 4.8% year on year; including 5.3% in the first quarter, 4.7% in the second quarter and 4.6% in the third quarter. It is indeed a downward pressure. But overall, it is still a medium term high growth rate.
2. In 20
24, China's industry is relatively strong, while the service industry is relatively depressed, with real estate and construction as a drag on growth.
For example, in the first three quarters, the industrial added value increased by 5.7% year on year, 1.5% points higher than the growth rate in 2023;mong them, the added value of manufacturing industry increased by 5.9% year on year, 1.5 percentage points higher than the growth rate in 2023. Despite the recent slowdown, industrial production is generally relatively strong.
The automobile manufacturing industry, especially the new energy vehicles, has grown very fast and continues to be a driving force for China’s economy. We can see that the production and sales of the new energy vehicles grew by more than 30 %, it's quite fast.
I believe that BMW should allocate more resources to the development and promotion of new energy vehicles in the Chinese market, as it remains a significant market. The data shows that the new energy sector has experienced a substantial growth of 30% to 35%, which is quite remarkable.
However, in the first three quarters, the value added of the service sector increased by 4.7% year on year, which is quite high but still relatively weak in the context of China’s economy. Among them, the value added of the real estate industry decreased by 4% year on year, it is a big drag on China’s economy. Along with the decline in real estate sector, the construction sector also decreased. It is still growing but the the growth rates declined. That is about the picture. And we can also tell from the table that the industry sector and the manufacturing industry increases, but the banking business decreases and the realty industry declines. That's the whole picture of the economy.
3. In 202
4, China's foreign trade situation improved significantly, and the growth rate of both export and import rate picked up significantly.
It is turning from the negative growth to positive growth. For all exports regions, including the ASEAN, the U.S., the EU and the rest of the world, all turned from negative growth to positive growth. So, in 2024, China’s trade improved significantly and profoundly in the world.
4. Howev
er, Domestic demand remains weak, and the growth rate of consumption and investment is low, restricting the unleash of economic growth potential.
I want to point that excluding the real estate sector, the investment and the consumption are good. For example, in terms of investment, fixed asset investment only increased by 3.4% year on year, but excluding real estate investment, fixed asset investment grew 7.7% and private investment 6.4%. So the real estate sector becomes a big drag on the economy.
5. The
real estate market continues to deeply adjust, causing great short-term downward pressure on all aspects.
There are two economy scenarios in chart, one including the real estate sector, while the other one excluding the real estate sector. We will see two different pictures and that's important for the economy.
Since the second half of 2021, the real estate market has begun to decline, and a series of indicators such as real estate investment and sales have experienced a sustained and serious contraction. So far, there has been no obvious turning point, which has become the focal point for the deterioration of a series of macro indicators such as investment, consumption, financial credit and local finance.
From the perspective of the completed amount of real estate development investment, it decreased by 10% in 2022,9.6% in 2023,10.1%, 26.9%, compared to 2021; from the source of real estate development funds, 25.9% in 2022,13.6% in 2023 and 48.9% compared to 2021.
From the perspective of commercial housing sales, it decreased by 26.7% in 2022, 6.5% in 2023, and 22.7% in 2021; from the sales area of commercial housing, 24.3% in 2022,8.5%, 17.1% from January to September in 2024, and 43.2% compared to 2021.
In terms of new construction area, it decreased by 11.4% in 2021,39.4% in 2022,20.4% in 2023 in 2023,22.2% in 2024,11,1.1% in 2010,15.5% in 2021 and 53.4% in 2022, up to 2022,65.5% compared to 2018.
6. In 2024,
prices in China will remain low and the macro economy is at the bottom of the economic cycle.
We can see in the first picture, CPI rose 0.3% year on year.
I think it's quite different in here and in the U.S., and core CPI was 0.1% while PPI decreased by 2.0% year on year. The GDP deflator decreased by 0.7% year on year in the first quarter, indicating that the current Chinese economy is still at the bottom of the cycle, but showing signs of recovery.
7. The
overall employment situation was stable, the unemployment rate fell, and the growth of household disposable income improved.
According to the surveyed urban unemployment rate index, household employment has basically recovered. In the first three quarters of the year, the average surveyed urban unemployment rate was 5.1 percent, 0.2 percentage points lower than the same period of last year. In September, the surveyed urban unemployment rate stood at 5.1 percent, down 0.2 percentage points from the previous month. At the end of the third quarter, the total number of rural migrant workers was 190.14 million, up 1.3% year on year.
The growth rate of household disposable income has stabilized and picked up, higher than the economic growth rate. In the first three quarters, the nominal per capita disposable income increased by 5.2% year on year, 1.1 percentage points higher than the nominal GDP growth, and 4.9%, 0.1 percentage points higher than the real GDP growth.
