China’s economy grew by about 5.2 per cent in 2023 Premier Li says

China’s economy grew by about 5.2 per cent in 2023, slightly better than the official target Beijing had set, Premier Li Qiang said on January 16 at the World Economic Forum’s annual meeting in Davos, Switzerland.

“In the past year of 2023, China’s economy has generally rebounded and improved,” the country’s second highest official told the meeting of global business and political leaders, CNN reports.

The Chinese government had earlier said that it was targeting a growth rate of around 5 per cent for 2023, and is set to announce its annual GDP figures for last year on January 17.

While this expansion would mark a significant pick-up over 2022, when China’s economy grew by just 3 per cent, it is still one of the country’s economic worst performances in over three decades.

Barring the pandemic years through 2022, when China’s growth was disrupted by strict lockdowns and other restrictions, 5.2 per cent is the country’s slowest pace of annual growth since 1990, when the economy expanded by 3.9 per cent because of international sanctions following the 1989 Tiananmen Square massacre.

The country has been beset by a series of economic problems, including a real estate crisis, record youth unemployment, deflation, and a rapidly ageing population. International economists have widely projected China’s growth to slow to around 4.5 per cent this year.

Those problems have sent investors rushing for the exits. China’s stock markets were the biggest losers in 2023. The country’s blue-chip CSI 300 index fell more than 11 per cent, while Hong Kong’s Hang Seng was down 14 per cent. Meanwhile, the MSCI World index closed the year 22 per cent higher, its biggest annual jump since 2019.

“Even if there are twists and turns in China’s economic operation, its overall long-term positive trend will not change,” said Li. The premier is the most senior Chinese leader to attend the Davos forum in person since President Xi Jinping in 2017.

Li also tried to reassure international investors, who have become increasingly wary of China’s tough business environment and slowing growth.

“Investing in the Chinese market is not a risk but an opportunity,” he said.

The country has about 400 million people in the middle-income group, and that number is expected to double to 800 million in the next 10 years, Li said.

“The momentum for consumption … is very strong,” he added.

Ongoing urbanization will create huge demand in sectors such as housing, education, medical and elderly care, he said, adding that there are still nearly 300 million rural Chinese who will eventually migrate to cities.

There is also a lot of room for investments in upgrading urban transportation and telecommunications infrastructure, he noted.

Li also pledged to create “first-class” operating environment for international businesses in China.

“No matter how the world’s situation changes, China will adhere to its fundamental national policy of opening up, and its door will only get wider and wider,” he said.

His remarks come as Beijing intensifies its efforts to revive the economy and woo foreign investment back into the country. Foreign companies have grown wary of Beijing’s rising scrutiny and are pulling out. In the third quarter, a measure of foreign direct investment (FDI) into China turned negative for the first time since 1998.