China continues to struggle with a housing crisis that shows no signs of turning three years into the crisis. We expect it to weigh on the economy again this year. However, the overall economy continues to muddle through with the help of stimulus and industrial policy.
In 2024 we look for growth to moderate from 5.2% to 4.5% but the decline is mostly due to less favorable base effects compared to 2023. Monetary and fiscal easing is expected to continue. The government growth target for 2024 is expected to be 5%.
Exports should perform better this year and we also look for more decent growth in manufacturing investments as well as infrastructure supported by a strong focus on green investments. Consumption growth, however, is set to slow and together with the housing crisis provides the main downside risk to the outlook.
In 2025 we look for growth to stay soft around 4.5%. China is in the middle of a long painful transition from a growth model highly dependent on housing to a new model where China aims at growth drivers to be hightech investments, upgrade of manufacturing, green investments and consumer demand.
Intense US-China geopolitical rivalry is here to stay despite the recent improved dialogue. We expect EU to at least double tariffs on Chinese EVs from 10% to 20-25% this year.
Full report in PDF.
