China’s economy has made a significant rebound in 2023, with real GDP growth estimated to align closely with the authorities’ target of around 5 percent, according to the International Monetary Fund (IMF). This resurgence follows the post-COVID reopening and is driven primarily by robust domestic demand, particularly in private consumption.
The IMF’s executive board released a statement after concluding its annual Article IV review of the Chinese economy, highlighting the supportive macroeconomic policies that have facilitated this growth. Key measures include the relaxation of monetary policy, tax relief for businesses and households, and increased fiscal spending on disaster relief. These policies have collectively spurred economic activity and boosted consumer confidence.
Inflation, which fell in 2023 due to decreased energy and food prices, is expected to rise gradually to 1.3 percent in 2024. This anticipated increase is attributed to the narrowing of the output gap and the diminishing base effects of previous commodity price fluctuations.
The IMF also noted that decisive policy actions, such as accelerated restructuring in the property sector, could further enhance confidence and potentially lead to a stronger rebound in private investment. The property sector’s stability is considered crucial for sustained economic growth and investor sentiment.
An IMF delegation visited China from October 26 to November 7 for the 2023 Article IV consultation. During this period, the team engaged in constructive discussions with senior government officials, representatives from the People’s Bank of China, private sector stakeholders, and academics. These meetings focused on China’s economic prospects, potential risks, ongoing reform efforts, and appropriate policy responses.
The IMF’s positive assessment reflects China’s efforts to navigate the complexities of the global economic landscape post-pandemic. The country’s focus on stimulating domestic demand and implementing supportive policies has positioned it for continued growth, contributing significantly to the regional and global economy.
Reference(s):
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