•As the Chinese economy navigates the post-pandemic recovery landscape, consumption has emerged as a powerful growth driver.
•Experts say that China's growth not only outpaces the estimated global growth of three percent, but also ranks top among major economies.
As the world ushered in the New Year in January, China started off with renewed hope for the year’s economic prospects. The country’s three-day holiday witnessed warming consumer sentiment and got the economy off to a strong start in 2024. From record box office earnings to bustling tourist attractions and enthusiasm for winter activities, there was a holiday boom in travel and tourism over the short period.
Despite domestic challenges and external pressure, the Chinese economy ended 2023 with target-beating growth, providing a strong impetus for the global economy. China's gross domestic product (GDP) grew 5.2 percent year on year to a new high of about US$17.7 trillion. According to the National Bureau of Statistics, the growth rate is higher than the government's annual target of around five per cent, and exceeded the three per cent increase in 2022.
Data also revealed that key segments of the economy, including consumption and service activity, have recovered after China adjusted its Covid-19 pandemic response at the beginning of 2023. China's contribution to global GDP growth is expected to reach over 30 per cent in 2023, making it the strongest growth engine in the world. Experts say that China's growth not only outpaces the estimated global growth of three percent, but also ranks top among major economies.
The culture-infused tourist boom at the start of 2024 greatly stimulated consumption, with 135 million tourist trips made in China during the three-day New Year vacation, up 155.3 percent year on year. Recent data from China’s Ministry of Transport indicates that the passenger volumes on railways, roads, waterways and airways nationwide totaled nearly 130 million from December 30, 2023 to January 1. According to the Ministry of Culture and Tourism, the total revenues of China's tourism market surpassed an estimated US$11.26 billion in the three days, tripling the total for the 2023 holiday season and increasing 5.6 percent from 2019.
The country saw 5.18 million inbound and outbound trips during the three-day holiday, 4.7 times more than the figure for the same period last year, and returning to the 2019 level, said the National Immigration Administration. China's box office revenue also registered a stellar performance.
Ticket sales amounted to approximately 1.53 billion yuan during the holiday, surpassing the previous record earnings of 1.3 billion yuan seen in 2021. Indeed, the Chinese film market is showing signs of robust recovery momentum, with the total box office earnings for 2023 exceeding 54.91 billion yuan.
As the Chinese economy navigates the post-pandemic recovery landscape, consumption has emerged as a powerful growth driver. China's total retail sales of consumer goods, a major indicator of the country's consumption strength, climbed 7.2 percent year on year to reach about US$47.15 6.63 trillion in 2023.
According to the annual Central Economic Work Conference held in Beijing last month, the development of digital consumption, green consumption and health consumption will be promoted further, and new growth areas such as the consumption of smart home appliances, entertainment and tourism, sports events and trendy domestic brands will be fostered.
The upcoming Spring Festival holiday which kicks off on February 10 is set to further fuel economic recovery as cultural and tourism demands soar. This is China's most important festival and an occasion marked by family reunions. This year's holiday runs until February 17, one day longer than in previous years. Bookings for outbound and inbound trips have both recorded in excess of 10-fold increases year on year.
For an increasing number of people living in China's vast rural areas, new energy vehicles (NEVs) are no longer a preserve of commuting only to city dwellers. The National Development and Reform Commission said recently that it would move to optimise policies to promote NEV consumption, including boosting NEV development in rural areas.
Experts conclude that China's economic outlook in 2024 will continue to rebound and improve as "the country's long-term sound fundamentals remain unchanged." China's economic development this year is underpinned by various favorable conditions, including sound economic momentum, strong resilience, great vitality, deepened reform and opening-up, and ample policy space.
The positive effects of an array of measures introduced in 2023, including the issuance of more government bonds, tax and fee cuts, as well as the reserve requirement ratio and interest rate reductions, are expected to extend to 2024.
China now boasts the world's largest middle-income group of more than 400 million people. Experts expect the middle-income population to expand to over 800 million in the next 15 years, which means the creation of a gigantic domestic market. Continued urbanisation and rising income levels are expected to sustainably drive consumption growth in the medium to long term.
Stephen Ndegwa is the Executive Director of South-South Dialogues, a Nairobi-based communications development think tank, and a PhD student at the United States International University-Africa