The Chinese economy
The Chinese economy
China’s Economy
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In a New Year’s address, Xi Jinping made a rare acknowledgment of the flagging economy while reiterating the government’s growth targets.
By Daisuke Wakabayashi and Claire Fu
China’s most sensible leader, Xi Jinping, momentarily departed from the same old talking points in his New Year’s speech to acknowledge the demanding conditions of the country’s faltering economy and promised the incumbent government to usher in the next phase. of growth.
“The current economic functioning faces new situations, there are demanding situations due to the uncertainty of the external environment and the stress of the transformation of new and old factors, but those can be overcome by hard work,” Mr. Xi said in a televised speech on state television channel CCTV.
“Everyone has complete confidence,” he said.
Even indirect reference to economic problems is unusual in a speech given by Xi, who uses such annual speeches to tout the government’s achievements over the past year. In recent weeks, China has placed greater emphasis on wanting to take action for its economy.
The country’s leaders have promised in recent months to increase government borrowing, spend more and cut interest rates to revive customer spending, a weak spot in China’s economy. China’s economy has struggled to recover from the Covid-19 pandemic, hampered by widespread unrest in the real estate sector and a relentless decline in prices.
China also faces the prospect of a clash with President-elect Donald J. Trump, who has threatened to impose price lists on foreign goods, which could lead to even higher taxes on U. S. imports from China.
At the New Year’s celebration on Tuesday, Xi said the economy grew “about five percent” in 2024, meeting the goal declared by the government since the beginning of the year. He said the general functioning of the economy is “stable and regular. “
Xi’s confirmation of China’s 5% target for gross domestic product, a measure of economic activity, raised questions about the validity of those figures.
“China’s assertion in 2024 that GDP expansion was on track to meet lofty targets is highly unlikely to reconcile with increasingly frantic efforts to shore up a flagging economy during the year,” consulting firm Rhodium Group wrote. in a report on Tuesday.
The government’s ambitious measures, such as the flexibility of its financial policy for the first time in 14 years, do not correspond, according to Rhodium, to the moderate expansion that the 5% objective would indicate.
Rhodium estimates that China’s economy grew between 2.4 percent and 2.8 percent in 2024. It estimated that China can reach between 3 percent to 4.5 percent growth in 2025, and would reach the high end of that range only “if everything falls in Beijing’s favor.” Analysts have said that the Chinese economy is too reliant on exports and policymakers must do more to bolster domestic demand.
Daisuke Wakabayashi is an Asia business correspondent for The Times based in Seoul, covering economic, corporate and geopolitical stories from the region. More about Daisuke Wakabayashi
Claire Fu covers China with a focus on business and social issues in the country. She is based in Seoul. More about Claire Fu
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