China posted 5.2% GDP growth in 2023, reaching the 5% government’s target, but its recovery has been uneven. The outlook for 2024 is mixed.

GDP growth reached 5.2% in 2023 vs 3.0% in 2022, but the post-COVID recovery has been patchy. In Q4, GDP growth slowed to 1% vs 1.5% in Q3.

Of particular relevance to commodities, the property market continued to suffer in 2023, with investment in the sector falling 9.6% year-on-year. Property sales by floor area fell 8.5% year-on-year and construction starts were 20.5% lower. This is despite the loose monetary policy implemented by China’s Central Bank (PBOC). Exports were another weak spot with a 4.6% y-o-y decline due to a subdued global economy coupled with rising trade barriers. Imports, meanwhile, were down 5.5% year-on-year, a reflection of weak domestic demand. Retail sales rose 7.2%, performing below expectations, reflecting a lack of consumer confidence.

However, not all sectors were weak. Industrial production rose 4.6% year-on-year, accelerating in the last months of the year, driven by mining and manufacturing. Car manufacturing remained a bright spot with 30.1M units sold in 2023, a 12% year-on-year increase. EV sales rose 38% to 9.5M units, reaching 31% market share.

Meanwhile, energy transition is, and will remain, a key priority for China. Despite a weak economy in 2023, China commissioned as much solar PV as the entire world did in 2022, while its wind additions also grew by 66% year-on-year. Globally, solar PV alone accounted for three-quarters of renewable capacity additions worldwide.

The Chinese economy will enter 2024 in a similar shape to 2023. Although the Chinese government's 2024 target is likely to be ‘around 5%’, most forecasts range between 4.4-4.8% with the key factors shaping 2023's economic performance remaining unchanged. Some stabilisation of the property market is likely, but the pace of any recovery is uncertain and largely depends on whether the Chinese government will enact fiscal stimulus measures. Most, however, expect to see a continuation of monetary easing and new debt issuance for infrastructure and energy rather than direct support for households, implying a mixed outlook for 2024.