Earlier this year, China announced an ambitious goal of reaching 5% economic growth in 2024. Today, nearly seven months into the year, economists and government officials say they are optimistic that China can reach its goal.
“We have the confidence and capability to achieve the growth target,” Chinese Premier Li Qiang said at the World Economic Forum’s Annual Meeting of the New Champions (AMNC), a gathering of top global voices from government, business, civil society and academia held in Dalian, People’s Republic of China.
“China’s large market is open,” Li stated. “The rapid growth of new industries and new drivers has buttressed the sound and sustained development of the Chinese economy.”
Peng Sen, the President of the China Society of Economic Reform, added at the summit that he is “fully confident” that China can achieve its 5% goal.
Li Qiang, Premier of the People's Republic of China.Image: World Economic Forum
New avenues of growth
Following the government's open and reform economic policies in the 1970s and 1980s, China’s rate of economic growth has been unparalleled. Economic output per person, for instance, has increased by roughly 3,000% in recent decades, leading many analysts to refer to China’s economic growth as a “miracle.”
Economic growth in China, however, has slowed in recent years. Growth is projected to decelerate to 3.3% by 2029, according to the International Monetary Fund (IMF).
“Even a so-called slowed down growth of China is actually incredibly relevant for the global economy,” noted Aparna Bharadwaj, Managing Director and Partner at Boston Consulting Group.
Experts maintain that new avenues of growth will be required for China to retain steady growth. This includes expansion in new and transforming industries like artificial intelligence, digital financial services and green technologies like electric vehicles.
Jin Keyu, a Professor of Economics at the London School of Economics and Political Science, noted that “trillions of dollars of investment is needed” for the global green transition, adding that “China is going to play a very essential role” in the transformation.
Already, China’s expanding clean energy sector accounted for an estimated 40% of the country's economic expansion in 2023. Meanwhile, private sector spending on research and development has doubled in the past five years.
The World Economic Forum’s Chief Economists Outlook: May 2024, a survey of top economists around the world, also found that analysts broadly expect further growth in China.
Of the economists surveyed in the report, nearly 75% said they expect moderate growth in China. The figure marked an increase from the 69% who expected moderate growth the previous edition of the report conducted in January.
High-quality growth
In 2017, Chinese President Xi Jinping said that China would transition its economy away from a period of high-speed growth to a stage of high-quality growth.
Today, experts maintain that a focus on high-quality growth remains vital to ensuring medium- and long-term economic growth. At AMNC24, participants noted that high-quality growth should largely be rooted in advanced technologies.
“We need high-quality growth in order to stimulate our development and our growth,” Peng said. “This depends on the transition, the revolutionary transformation, on the technological front, and as for the traditional sectors, they need upgrade and they need a deep transformation.”
Industries associated with high-quality growth include sectors like generative AI systems, semiconductors and renewables energies, experts say. Maintaining efficient supply chains and access to global markets is essential to high-quality growth, too.
“The really important point to note is that this is all part of a global supply chain,” Jin added. “China might be leading the way in EVs, batteries and solar panels, but they are all embedded in a global supply chain. And it's going to involve everybody.”
Geopolitical headwinds
Analysts note that despite China’s positive economic outlook for 2024, obstacles and hindrance to growth do persist. Notably, this includes geopolitical tensions and global economic fragmentation.
“Geopolitics, of course, is intrinsically a zero sum game,” said Eswar Prasad, a Professor at Cornell University. “But now even the economic relationship is seen as a zero or even negative sum game.”
Last year, the IMF estimated that economic fragmentation and increased international trade restrictions could cost the global economy $7.4 trillion and cut global economic output by as much as 7%.
Experts note that in particular, tensions between the United States and China pose a significant threat to economic development worldwide — especially for developing economies.
“Business leaders in the Global South would like to do business across geopolitical boundaries,” Bharadwaj stated, adding that restricting economic access to large economies can significantly hinder economic opportunities.
Jin added that to ensure sustained economic growth, we need to “make sure we keep China open for business and make sure we keep the world open for China.”
Weforum