China’s 5.2% growth disappoints, population shrinks for second year running

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Bankinter : China: poor growth and adverse demographics – GDP 4Q 2023 was 5.2% rather than the 5.3% expected and the 4.9% previous. Retail Sales in December were up 7.4% against the 8.0% expected while Industrial Production was up 6.8% against the 6.6% expected and previous.

Analysis: GDP over 2023 has been +5.2%., which is slightly below market expectations, although above the government’s formal target of +5.0%. The weakest indicators refer to Real Estate and Consumption.

New housing prices, down -0.5% month-on-month, fall for the seventh consecutive month and real estate investment is down -9.6% for the year as a whole. Consumer confidence continues to deteriorate and, consequently, retail sales grow below expectations, +7.4% against the +8.0% expected. Moreover, China remains in deflation (-0.3%). This context increases the likelihood that we will see further monetary/fiscal stimulus in the short term.

Demographics add to all this. The population is contracting for the second consecutive year (-2.08M 2023 and -0.85M 2022), a consequence of the one-child policy, already abandoned but whose consequences are impossible to reverse in less than two generations, structurally affecting GDP. These data reinforce our strategy of staying out of the Chinese economy.

Stock markets fall: CSI-300 -1.8% and Hang Seng -3.9%.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.