Without the benefit of the base effects it enjoyed in 2023, China's growth will slow in 2024

Most of the challenges China faced last year are likely to persist into this year

Although China is expected to deliver solid growth relative to many other APAC markets this year, its performance is likely to be underwhelming, and the business environment in which multinationals operate is unlikely to significantly improve. Consequently, regional executives must strike a careful balance when making the case internally. While China will continue to provide substantive opportunities, capitalizing on those opportunities will remain challenging.  

Internal pricing conversations are likely to be especially difficult. While many multinationals intend to continue pushing through price increases this year, relatively weak demand and low or negative inflation rates will make this move risky across many segments in China. Regional and country-level executives therefore face the unenviable task of finding the right balance between volume and value and driving alignment to support that balance.  

It’s also worth noting that industrial production in China is likely to witness increased overcapacity this year, particularly among state-supported manufacturers. This will present enormous challenges for many multinationals, as pricing pressure and intensifying competition lead to revenue erosion. Executives should prepare well in advance to adapt to this dynamic landscape.


  • China’s economy grew 5.2% YOY in 2023, surpassing the government’s official growth target of 5% for the year, according to official data. 
  • Industrial value-added grew 4.6% YOY in 2023, up from the 3.6% YOY recorded a year earlier. However, fixed-asset investment slowed drastically to 3.0% YOY, down from 5.1% YOY in 2022. 
  • Consumption rose 7.2% YOY in 2023, benefiting from the reopening following COVID lockdowns. Notably, consumer spending on services such as catering and travel was consistently stronger than that on products throughout the year.
  • Five months after it stopped releasing the youth unemployment rate, the National Bureau of Statistics started publishing it again, with a new methodology that excludes school students. In December 2023, the newly defined youth unemployment stood at 14.9% for the age group of 16–24, 6.1% for the age group of 25–29, and 3.9% for the age group of 30–59.

Our View

Our forecast for China’s economy predicted a growth of 5.1% in 2023, a figure only marginally lower than the official growth rate of 5.2%. Overall, the official full-year 2023 numbers released last week caused little surprise.

However, it should be noted that achieving the target does not necessarily signify that China’s economy is out of the woods. Most of the challenges China faced in 2023—a downturn in the property market, tepid consumer demand, and skyrocketing local government debt—are set to continue into 2024. These issues will continue weighing on the nation’s economic growth this year.

Naturally, substantial hope has been placed on additional stimulus measures. Although the central government is expected to issue more special-purpose bonds to fund infrastructure projects across the nation to fuel growth, the efficacy of such stimulus tactics has long been under scrutiny. What’s more, there are reports that the central government, wary of high debt levels, has instructed a group of heavily indebted local governments to delay or even halt some state-funded infrastructure projects. If that happens on a large scale, the special-purpose bonds’ impact on growth will be limited.

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