Kavan Choksi / カヴァン・チョクシDiscusses the Recent Growth in China’s Economy

While the world is grappling with a challenging recovery and slowdown in economic growth, the economy of China has managed to maintain a somewhat steady development.

As Kavan Choksi / カヴァン・チョクシ says, this steady development is bolstered by the rise of new industries and new growth drivers. During the 15th Annual Meeting of the New Champions convened by the World Economic Forum (WEF), the participants hailed China’s efforts in cultivating new quality productive forces. They noted that these forces have not only helped inject vitality into the Chinese economy but also expanded opportunities for global cooperation.

Kavan Choksi / カヴァン・チョクシ sheds light on the recent growth and development in China’s economy

The contribution of China to world economic growth has stayed at around 30% over the years, and the country is still a major driving force for global economic growth. The Chinese government has been aiming for around 5% GDP growth and the creation of over 12 million new jobs in 2024. The employment figure has always been a very important target for the government. In addition to providing jobs to the graduates of the country, it also serves as a reflection of China’s shift from a low-cost manufacturing economy to one with larger services and high-value-added production sectors.  This process of deindustrialisation is typically expected when a nation reaches an upper middle-income level, which is where roughly China is at. As the service sector is largely labour-intensive, this shift is expected to create more jobs.

Even though China reduced its GDP growth target from 6–6.5 % in 2019 to about 5% in 2024, it also did increase its employment growth target from 11 million to over 12 million within the same period. Prior to the Covid-19 lockdown in 2019, 13.5 million jobs were created in the country, surpassing China’s employment target at the time. Annual urban employment had grown by more than 13 million for seven consecutive years up to 2019. By overshooting expected employment rates, the Chinese government may have gained some confidence in increasing the employment growth target even as they cut the GDP growth target. This aligns with expectations that when a country reaches upper middle-income level, its growth rate will slow since it has exhausted more of its ‘catch up’ growth potential.

Kavan Choksi / カヴァン・チョクシ mentioned that the World Bank recently increased its forecast for China’s 2024 economic growth to 4.8%. This is 0.3 percentage points higher than the previous forecast. The International Monetary Fund (IMF) also revised China’s economic outlook to 5 %, 0.4 percentage points higher than the previous forecast. In the first half of 2024, the economy of China managed to exceed expectations and showed strong resilience, especially in emerging industries. The country particularly gained an international edge in electric vehicles, lithium batteries as well as photovoltaics. Renewable energy now accounts for over 50% of the country’s total installed capacity.

China’s sustained economic growth is likely to have positive spillover effects for the rest of the world. After all, China is a major trading partner of over 140 countries and regions.  Moreover, its trade in goods with other countries grew by 6.3 % year on year, in the first five months of 2024.