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The 14th National People's Congress was held in Beijing recently. According to the government work report submitted to the National Legislature on 5 May 2024, China’s gross domestic product expanded 5.2 percent in 2023, which is aligned with the preset target around 5 percent. It was driven by a slew of policy measures, despite various challenges from home and abroad. The report also set the key tones for China’s 2024 economy development.
Macro Economy
China set 2024 GDP growth target around 5 percent. It means nominal GDP growth will be about 7.4%, considering the deficit rate and fiscal deficit, almost on par with 2023.
Meanwhile, the fiscal policies will remain relatively proactive in 2024, the deficit-to-GDP ratio was set at 3 percent for 2024, with the government deficit to rise RMB 180 billion from the 2023 budget figure. And “ultra-long” special treasury bonds of RMB 1 trillion and special-purpose bonds for local governments will be issued to support major projects in 2024.
à The growth rate of investment in infrastructure will be relatively stabilized in 2024.
Energy consumption per unit of GDP aims to be cut by about 2.5% in 2024.
à The pressure on the coal, power generation, steel and other industries on the supply side will be reduced. This also shows the Chinese government's firm determination to promote the green transition of its economy and society.
Industry Guidance
Real estate market to optimize real estate policies and accelerate the construction of new models for real estate development; to ensure both small and medium-sized property developers will receive equal treatment in terms of financial support; to scale up the construction and supply of subsidized housing and improve the basic systems of commodity housing.
à The real estate market plays an important role in the Chinese economy and GDP, as it contributes to investment, consumption, employment, fiscal revenue, and social stability. However, the real estate market faced some challenges, and performed sluggish in the past few years, dragging on China’s economy. With policy control eased somehow and developers’ liquidity improved, the real estate market tends to recover and stabilize slightly and continue to work as one of the key pillars of the Chinese economy in 2024.
To vigorously ensure the security of the country's food, energy, industrial chain and financial system. This will include food production, storage, and processing systems, enhancing the resilience and competitiveness of the industrial chain and supply chain.
à Oil and gas, strategic mineral mining, national water network and new energy industries would be the focus in the following years.
Accelerate the establishment of modern industrial system, develop green, high-tech, safe and efficient new quality productive forces, and further promote digital economy. The report mentioned China will carry out technology transformation and upgrading in manufacturing sector, to make traditional industries higher-end, smarter and more eco-friendly.
à Investment in the manufacturing industry will speed up in 2024, the demand on industrial automation equipment, especially industrial software market, will increase in the mid-terms. Industries, like new energy vehicles and intelligent connected new energy vehicles, will take the lead.
à Iron and steel, petrochemical, chemical, nonferrous metals, and building materials would remain as the focus to realize energy conservation, carbon reduction and green transformation.
The report highlights on intelligent networked new energy vehicles, emerging hydrogen energy, new materials, innovative drugs, biomanufacturing, commercial aerospace, low-altitude economy and other fields.
à China aims to achieve carbon peak by 2030 and carbon neutrality by 2060. By the end of 2023, the installed capacity of renewable energy generation in China has reached 1.516 billion kilowatts, accounting for 51.9% of the total, surpassing traditional power for the first time. China will continue to shift from thermal power to new energy, while thermal power guarantees the energy security and stability. This will also open up new potential for thermal power, and great demand on energy storage and smart grid in the following years.
à Hydrogen energy was comprehensively presented in the work report, after being mentioned in the 2019 work report. Since 2023, China has made great strides in hydrogen innovation and application, exploring the potential of hydrogen as a clean and versatile energy carrier. Hydrogen energy development will enter a new stage in the following years.
The report also proposed to launch Artificial Intelligence Plus (AI+) initiative and enhance disruptive and frontier technology research.
à It is the first time for China to add AI+ into government work report, China will step up to develop the applications of big data and AI and build digital industry clusters with international competitiveness, establish national AI platform, strengthen the core technologies and standards of AI, and enhance the ethical and legal governance of AI. The initiative will also support the cultivation of high-level AI talent, the construction of AI research centers and institutes, and the collaboration with international partners and organizations.
Expanding domestic demand, consumption and people's livelihood. Encourage and promote the exchange of old for new consumer goods and boost intelligent connected new energy vehicles and electricity bulk consumption. The work report also mentioned promoting the upgrading and technological transformation of production and service equipment.
à The markets for new energy vehicles, electronics, home appliances and construction machinery will benefit. However, its effect is up to specific policies afterwards. Meanwhile, the demand on specialized equipment, general equipment and instrumentation will be driven.
Restrictions on foreign investment in the manufacturing sector will be lifted in an all-round way, and service industries such as telecommunications and healthcare will be reduced. In addition to the Belt and Road Initiative, we will promote the China-ASEAN Free Trade Area (CAFTA) 3.0 negotiations, the Digital Economy Partnership Agreement, Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
à This may drive foreign direct investment in related industries, creating more employment and impacting the trend of RMB afterwards.