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China’s GDP grew around 5.2% in 2023, Premier Li says at Davos

Bloomberg
Bloomberg • 4 min read
China’s GDP grew around 5.2% in 2023, Premier Li says at Davos
Chinese premier Li Qiang speaking at Davos. Photo: Bloomberg
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China’s economy grew around 5.2% in 2023, surpassing the government’s official growth target for the year without relying on “massive stimulus,” Chinese Premier Li Qiang said in Davos, Switzerland.

“Last year in 2023, the Chinese economy rebounded and moved upward with an estimated growth of around 5.2%, higher than the ‘around 5%’ target set at the beginning of last year,” Li said on Tuesday in his first appearance as China’s No. 2 official at the annual World Economic Forum. 

“In promoting economic development, we did not resort to massive stimulus,” Li added. “We did not seek short-term growth while accumulating long-term risk.”

Li — who was the highest-ranked official the nation has sent to Davos since President Xi Jinping attended in 2017 — underscored the efforts China has taken to inspire confidence in its economy and government. His comments came a day before the country is set to report its official 2023 GDP growth figure.

“It is unusual for senior officials to front-run an announcement in such specific terms, and presumably stems from Li’s desire to set a confident tone for the global audience at Davos,” Michael Hirson, China economist at 22V Research wrote in a note.

The NASDAQ Golden Dragon China Index, a gauge tracking Chinese companies listed in the US, fell 3.8% overnight to the lowest level since November 2022. Chinese electric vehicle maker Nio Inc. and Internet giant Baidu Inc. were among the biggest losers.

See also: Xi's big economic meeting shows party bracing for slower growth

Yields on China’s 10-year government bonds were steady at 2.53%, approaching a two-decade low due to bets on more easing by Beijing. The onshore yuan fell 0.2% against the dollar to the weakest level since mid-November as US yields rose. The offshore yuan was unchanged early Wednesday Beijing time.

Li continued his charm offensive at a luncheon hosted by World Economic Forum founder Klaus Schwab, along with heads of 14 multinational companies, including JPMorgan Chase & Co., Walmart Inc., Intel Corporation, BASF SE, Volkswagen AG and Siemens AG, according to a statement from the Chinese foreign ministry.

“Investing in China will bring huge returns and a better future,” Li told chief executives of the firms that he described as “participants, witnesses, and beneficiaries of China’s reform and opening up.” China “stands ready to seriously look into and solve the difficulties and problems encountered by foreign enterprises” operating in the country, he added.

See also: China’s renewable energy shift is altering the investment landscape

2024 Plans

China’s 2023 growth goal was deemed conservative by many economists at the time of its announcement. But persistent deflationary pressures and the prolonged property slump proved major challenges through 2023. While Li said the country did not use “massive stimulus” to hit the target, authorities did roll out some support in the form of interest rate cuts and fiscal aid.

The focus is now on how Beijing will keep that momentum going this year as it grapples with an erosion of confidence. The country is considering 1 trillion yuan ($190.49 billion) of new debt issuance under a so-called special sovereign bond plan this year to shore up the economy, according to people familiar with the matter.

Adding to the concerns, official data showed foreign investment in the third quarter of last year turned negative for the first time since 1998. That likely reflected less willingness by firms to re-invest profits in China, a trend partly due to the higher return abroad given the yield gap with the US.

Li reiterated a pledge to improve the environment for foreign firms in China. That includes shortening the “negative list” for foreign investment, removing restrictions on access in the manufacturing sector, and ensuring fairer treatment of foreign companies.

“With regard to concerns of some multinationals on issues such as cross border data flow and participation in government procurement, we are working on the formulation of relevant policies,” Li said.

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Xi’s also hit that theme in the past: In a November speech to business executives in the US, the Chinese leader signalled that improving the business environment was a priority.

A meeting during that trip with President Joe Biden has served to stabilize ties with the US after a year of friction, though that is being tested by the election in Taiwan of a new leader who is likely to press for closer ties with Washington, frustrating Beijing. 

Xi has been trying to balance a desire to revive an economy hampered by a slide in the property sector, while also strengthening national security amid lingering military and trade tensions with the US. Foreign executives have been especially spooked by probes of consultancy firms, the expansion a vague anti-spy law and moves restricting access to data.

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