What challenges does China’s economy face in 2024?

China’s economy is in a downturn, with many cities cancelling official countdown events and celebrations. The government is financially constrained and hesitant to take responsibility for many issues, fearing overstepping its bounds.

From 2020 to 2023, China faced significant development and survival pressures. As China faces 2024, some are concerned and disheartened, while others have hopes and aspirations.

Chinese President Xi Jinping emphasized the importance of delivering a better life for the people, including well-being for children, education, career opportunities, and adequate access to medical services and elderly care. These issues matter to every family and are a top priority for the government.

Researchers believe that these straightforward statements may garner more public approval. They suggest that the top leadership understands the grassroots situation and has pointed out significant gaps in improving people’s livelihood, education, employment, healthcare, and elderly care. Objectively recognizing and acknowledging these problems is the first step to solving problems in China.

China’s economic problems are rooted in past logic and require more than technical macro, industrial, and financial policies to address. The complex and rigid logic leading to these problems makes them difficult to solve and takes longer to resolve. China’s large-scale economy has complex aspects, including industrial, urban-rural, regional, internal and external, virtual and real, state-owned, private, and foreign-invested sectors.

The impact of internal and external factors on various subsystems of the Chinese economy varies, leading to differences in performance during post-pandemic recovery. For example, China’s consumption sector performance in 2023 differed significantly from manufacturing, while state-owned enterprises’ operational performance varied significantly from private and foreign-invested enterprises. Domestic and foreign economic environments also differed, with some sectors recovering while others continued to decline, potentially affecting this year’s economic performance.

China’s economic situation in 2024 is considered favourable if it stabilizes without systemic decline. Development goals should be rational and not overly ambitious, and economic and market laws should not be overlooked due to non-economic factors. China’s economy faces issues in both international and domestic directions, with the latter being more significant.

The concept of “domestic circulation” and “dual circulation of domestic and international” has been emphasized, with China facing international containment and pressure. As a response, China focuses on internal development to expand and deepen the domestic market.

However, rushing into the domestic market intensifies competition and fails to offset international losses. The fundamental solution lies domestically, with effective reforms and breakthroughs boosting market confidence. Without these reforms, improving the relationship between the Chinese economy and the world economy may be difficult.

ChinaChina economyChinese President Xi JinpingEconomyWhat challenges does China's economy face in 2024?Xi Jinping