China’s economic ‘risks will intensify’ in 2024, with EVs, property market, local government debts clouding prospects

China is on course to hit its ‘around 5 per cent’ economic growth target for 2023, but many institutions have cut their 2024 forecasts to 4.4 per cent or lower

Beijing urged not to set China’s 2024 growth target ‘too low’, although the world’s second-largest economy is set to face old and new risks next year

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Beijing is facing a “monumental” challenge to unwind China’s local debt crisis, according to US rating agency Standard & Poor’s. Photo: AFP

Published: 7:00am, 21 Oct 2023Updated: 7:42am, 21 Oct 2023

Overcapacity in the electric vehicle and other sectors, the ailing property market and mounting local government debts are likely to compromise economic recovery efforts and cloud China’s prospects in 2024, leading economists and academics warned on Friday.

China could kick off the new year with a bigger bounce, but momentum may taper off later as risks weigh heavier on economic growth, Shanghai University of Finance and Economics president Liu Yuanchun told a webinar.

Thanks to a slew of supportive measures to stem downturn risks since July, China’s economy rebounded modestly in the third quarter, rising by 1.3 per cent from the previous three months and gaining 4.9 per cent year on year.

However, business confidence and property investments have remained weak, while concerns over the sustainability of the recovery remain.

The world’s second-largest economy, though, is expected to hit Beijing’s “around 5 per cent” target for 2023 following the release of the third-quarter data this week.

But the International Monetary Fund, the World Bank and other institutions have cut their 2024 growth forecasts to 4.4 per cent or lower.

Liu, who was among select economists sought by Premier Li Qiang for policy recommendations at a State Council meeting last week, urged Beijing not to set China’s 2024 growth target “too low”.