China's Macroeconomic Report 2023:From Divergence to Balanced Growth
In 2023,China's economy continued to recover and high-quality development was solidly advanced.In 2023,China's macro-economy showed four new characteristics:the econom-ic recovery process was tortuous;compared with the traditional economic recovery process,tra-ditional leading indicators had failed during this recovery process;economic differentiation was obvious;and there was a large difference between macro performance and micro perception.Be-hind these four new characteristics,the restoration of production and living order was the main driving force for economic recovery in 2023.The prominent problem was the insufficient endoge-nous aggregate demand and the slow recovery of confidence.The reasons of the lack of aggregate demand are cyclical issues such as balance sheet shocks,and more importantly,structural prob-lems.For example,the traditional drivers of consumption are missing,and structural factors lead to overshooting of the real estate market,and trade among advanced economies is facing challenges.Further investigation shows that behind the structural problems is that China's econo-my is in a period of deep adjustment and transition from focusing on incremental capacity expan-sion to adjusting stock and optimizing incremental growth.The macro governance system and lo-cal government behavior model have not yet fully adapted.The combined force of policies and pol-icy transmission efficiency decrease.In 2024,although cyclical and structural problems are still prominent,the most difficult period of economic transition has passed,cyclical forces will bot-tom out and gradually start to rise,and new structural momentum will continue to gather.2024 is still in the dividend window period after the"the 20th National Congress of the Communist Par-ty of China",the implementation period of a new round of government agency reform and state-owned enterprise reform,the breakthrough period of new technologies promoting domestic sub-stitution,and the upward period of cyclical factors.Based on comprehensive judgment,the e-conomy will further return to normal growth in 2024.As cyclical forces bottom out and new mo-mentum gradually gathers,various industries are expected to move from a state of divergence in-to a stage of balanced growth.In 2024,we should focus on the following risks:(1)the interest rate gap between China and the United States will be maintained for a long period of time,thereby suppressing domestic asset prices;(2)the possibility of real estate liquidity risk spreading;(3)the structural and re-gional nature of local government debt problems are prominent;(4)local governments may exert too much force,interfering with normal market adjustments;(5)export pressure on developed economies in the United States and Europe is great,and adjustments to the international industri-al chain impact the upgrading of the export structure.We recommend setting an economic growth target of 5％for 2024.In 2024,we must further clarify the direction of high-quality develop-ment,timely launch practical new measures,enhance the confidence of enterprises and resi-dents,and stimulate new momentum for economic development.We should fully consider new changes in economic operations,strive to clear the transmission mechanism,and improve policy efficiency.
China's macroeconomyreal estateconsumptionlocal government debtstructural adjustment
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