ab24 January 2024Global Research and Evidence LabChina Economic PerspectivesChina by the Numbers (January 2024) Our guide to Chinese monthly dataWhat the numbers are, what they mean, and the outlook going forward.Q4 GDP growth edged up to 5.2%y/y on low base Q4 GDP growth slowed sequentially from Q3 but a low base pushed up the y/y growth to 5.2% (with a negative GDP deflator of -1.4%y/y). 2023 full-year GDP growth recorded 5.2% in real terms and 4.6% in nominal terms, in line with our expectation. The low base drove up the y/y growth of retail sales, exports, infrastructure FAI and manufacturing FAI, as did industrial production growth. December data suggest that property activities are yet to bottom, with sales and starts declining further from the November level. Retail sales decelerated as low base effect faded, while both manufacturing and infrastructure investment growth picked up. Growth of export volume picked up further in December, leading to a notable rebound in Q4 from Q3 (see Q4 & Dec data comment). Revise up 2024 GDP growth forecast to 4.6% The slightly stronger Q4 GDP growth outturn (5.2% vs 5.0% of our original forecast) and the revision of q/q growth in the previous quarters push the 2024 annual growth to 4.6% (vs. 4.4% previously envisaged), without any revision of our q/q sequential growth forecasts. In the coming months, we expect property activities and property market to stabilize, helping to underpin household confidence. That should support continued post-Covid consumption recovery along with the economy and labor market, though at a slower pace. Infrastructure investment growth is not expected to accelerate despite more explicit fiscal support. We forecast exports to improve modestly on the upswing of the global tech cycle despite the expected slowdown in US growth. More modest policy support ahead...We expect more policy support ahead, though likely modest in scale. We see a headline fiscal deficit of 3.5-3.8% (potentially including issuance of new special CGB), a larger special LG bond quota and additional debt-swap LG bonds. We see limited monetary policy actions, potentially a 10-20bps MLF rate cut and 25-50bp RRR cut, and liquidity facilities to help accommodate fiscal expansion. The Augmented Fiscal Deficit may expand modestly by +0.8ppt of GDP in 2024 vs +0.4ppt in 2023. We expect additional PSL quota of RMB 300-500bn following its recent increase of RMB 500bn (o/w RMB 350bn injected in Dec 2023). See more in 2024 key themes and CEWC takeaways....and new PSL in focus to support property activitiesWe expect more property policy easing including more credit support to developers and using the low-cost funding underpinned by PSL to support the purchase of existing housing inventory. It is not clear how much of the low-cost funding underpinned by PSL can be deployed by local governments and re...
