China’s economy to gradually heat up in 2024, with manufacturing, spending as top growth drivers, not property: Fidelity

China’s economy will show gradual improvement in 2024, propelled by manufacturing and consumption, rather than property and local government financing, amid a structural shift towards high-quality growth drivers, Peiqian Liu, Asia Economist at Fidelity International, said at a media briefing on Thursday.

“Tourism, entertainment, culture, and other related spending are all signs of an emerging middle class upgrading its lifestyle, so [these segments] are perhaps going to be part of the drivers of growth,” said Liu, adding that “in-touch” services consumption has also seen a meaningful rebound over the past year, on top of a recovery in traditional and consumer durables consumption.

She underlined the emergence of manufacturing as a pillar of the next phase of development and said that China is one of the world’s biggest manufacturing hubs, with its value-add “contributing to close to 30 per cent of the global outlook”.

“Even though we have seen fixed-asset investments moderately slowing down, the underlying divergence tells us that real estate is obviously a drag to the real economy …[and] the manufacturing sector has taken over the baton to become the main driver of growth.”

“That is where China’s competitive advantage lies,” Liu said.