Chinese industry has made a confident start to 2024

Data for January-February, published yesterday by the National Bureau of Statistics of China, indicate a strong start to 2024 in the country’s industry: China, we recall, has set as its goal annual GDP growth of 5%.

The current dynamics can no longer be explained by the post-Covid recovery impulse; its effect will be exhausted in 2023. Statistics in industrial production turned out to be noticeably better than expected: its annual volume in the first two months of 2024 increased by 7% (6.8% in December), analysts predicted an increase of 5%. Let us remind you that the National Bureau traditionally combines the indicators for January and February in order to smooth out the impact of the Chinese New Year celebration on them (weekends can fall in both January and February – the dates are determined according to the lunar calendar). In the first two months, the growth in the output of high-tech products continued to accelerate: in annual terms, the figure increased by 7.5%. The Chinese authorities note the “growing innovative potential” of the industry, mentioning, however, problems due to rising costs and a lack of export orders. Let us remind you that at the end of 2023, Chinese exports decreased by 4.6%, to $3.38 trillion. Supplies to the EU decreased by 1.3%, which may be explained by weak business activity, which, against the backdrop of strict monetary policy, was recorded in Europe for most of the year.

The growth of investment in fixed assets exceeded analysts’ expectations, which in January-February amounted to 4.2% (3% in December) instead of the forecast 3.2%. Investments in high-tech industries year-on-year grew by a record 9.4% in two years – we recall that the authorities stimulate such capital investments in the hope of achieving the goals of technosovereignty (for more details, see Kommersant on March 6)

Let us note that the confident start to the year is largely due to the measures deployed in the second half of 2023 to support the economy (see Kommersant of September 1, 2023). However, not all problems have been solved yet. One of the key factors remains weak consumer demand, which the authorities have failed to significantly accelerate over the past year. Retail sales rose 5.5% in January-February compared with the same period last year, although analysts had expected the figure to be 5.6% after December’s 7.4%.

Kristina Borovikova