The Squiz

China has announced that it hit its economic growth target for 2023 with its GDP (aka Gross Domestic Product – the value of everything a nation produces) in October-December growing 5.2%. That figure was slightly above Chinese economists’ predictions, and Premier Li Qiang (President Xi Jinping’s 2IC) says it shows the country remains a global economic superpower. But analysts aren’t so sure… They say the country’s post-COVID recovery is shaky as its overall growth rate slows, and forecasts show it’s not likely to get back on track this year.

Go on then, tell us why…

First, the country is in the grip of a massive property crisis. There’s a good explainer here, but long story short, China’s property market is struggling thanks to high levels of developer debt accumulated before the pandemic. The government intervened to stem the losses, but the sector has racked up huge losses. That’s led to less government spending to help the economy bounce back from the country’s strict and lengthy COVID shutdown. Less international spending is also causing trouble, and the country recorded its first quarterly foreign investment decline last year since records began in 1998. On top of that, analysts are spooked by China’s declining birth rate… New data shows its population dropped for the second consecutive year to 1.4 billion people – that will mean fewer workers for future economic growth.

So what does it mean for us?

That’s a reasonable question given China remains Australia’s largest trade partner. A slowing Chinese economy means less demand for Aussie exports. Iron ore is a big one – reports say Chinese orders are holding up, but could stall if China’s economy continues to slump. In 2024, Aussie policymakers and financial analysts will be keeping a close eye on China because if its economy slows our economic growth will likely slow too. Speaking of things the experts are looking at… The Bureau of Stats released new employment data yesterday showing fewer Aussies were looking for work in December, which had our unemployment rate staying steady at 3.9% despite 65,000 jobs lost from the economy. As for what that means for us in 2024, analysts are divided. 

Wanna know more? Who wouldn’t want to spend more time on China’s economic downturn… We’ve got just the Shortcut for you – have a read or get it in your ears here.