China: No major growth surprises as 2023 ends

China Macro: Yoy growth up in Q4, qoq growth down

China’s real GDP data for Q4-2023 published this morning came in slightly below consensus expectations including ours. Annual growth picked up to 5.2% yoy (ABN AMRO/consensus: 5.3%, Q3: 4.9%), but that was mainly due to a base effect from Q4-2022. Back then, China was faced with a broadening of Omicron related lockdowns, followed by social protests and an initially messy Zero-Covid exit. Quarterly growth slowed somewhat as expected, to 1.0% qoq s.a. (ABN AMRO/consensus: 1.1%, Q3: revised up to 1.5%). The latest GDP data confirm that the economy is still bottoming out from the dip in Q2-2023 (+0.6% qoq), but continues to face strong headwinds from the property sector woes and the slowdown in global demand. Annual growth for the whole of 2023 came in at 5.2%, which had already been signalled by Prime Minister Li Qiang in Davos the day before. With the 2023 growth target of 5.0% having been reached, the focus is now turning to this year’s target, to be announced during the annual National People’s Congress meetings in early March. So far, we have kept our growth forecasts for 2024 and 2025 unchanged at 4.7% and 4.6%, respectively.

December data show problems in property sector continue –December activity data clearly show that the property sector is not out of the woods yet. Although the government continues with targeted support to stabilise the sector, home sales do not yet show any sign of a meaningful recovery. In fact, the annual slump in residential property sales deepened in December to -6.0% yoy for the full year of 2023 (Jan-Nov: -4.3%). Property investment also remained clearly in negative territory (-9.6% yoy). New home prices in 70 cities showed the sharpest monthly drop (-0.45% mom) since February 2015. Meanwhile, annual growth of retail sales slowed more than expected in December, to 7.4% yoy (consensus: 8.0%, November: 10.1%), although in monthly terms retail sales accelerated to 0.4% (November: 0.1%). By contrast, industrial production and fixed investment did a bit better than expected. Annual growth of industrial production picked up to 6.8% yoy (consensus/November: 6.6%), while fixed investment growth rose marginally to 3.0% yoy in January-December (consensus/Jan-Nov: 2.9%). The surveyed jobless rate picked up marginally again, to 5.1% (consensus/November: 5.0%). All in all, Bloomberg’s monthly GDP estimate dropped to 7.3% yoy in December, down from 7.6% in November.