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On the last day of 2023, most cities in China did not hold official countdown events, and some places even canceled the celebrations. This reflects the current atmosphere of the country, that the economy is still in a downturn, while the market and public confidence remain insufficient. The government is both financially constrained and hesitant to take responsibility for many issues, fearing to overstep its bounds.
From 2020 to 2023, most people and businesses in the country have not had an easy time. Under the complex international and domestic environment, China is facing significant development and survival pressures. Facing 2024, some in China are not without worries, and some feel disheartened. Yet there is also a considerable number of individuals with hopes and aspirations, unwilling to resign to fate.
Regardless of their emotions, individuals and business entities in China still need to face the challenges of 2024.
“Our goal is both inspiring and simple. Ultimately, it is about delivering a better life for the people. Our children should be well taken care of and receive good education. Our young people should have the opportunities to pursue their careers and succeed. And our elderly people should have adequate access to medical services and elderly care. These issues matter to every family, and they are also a top priority of the government. We must work together to deliver on these issues”, said Chinese President Xi Jinping in his New year speech.
Compared to the grand narratives commonly seen in recent years, these straightforward statements might just garner more public approval. Researchers at ANBOUND posit that from a positive perspective, such statements reflect at least two points: first, the top leadership has an understanding of the grassroots situation. Second, Xi has actually pointed out many problems in past development, i.e., there are still significant gaps in improving people’s livelihood, education, employment, healthcare, and elderly care. In this regard, Researchers at ANBDOUND believe that objectively recognizing problems and straightforwardly acknowledging them is, in fact, the first step to solving problems.
From a macro perspective, ANBOUND’s researchers have some personal opinions on the economic situation in 2024:
Firstly, the emergence and development of China’s economic problems have their own logic and they will not be easily reversed. Even if changes are made, it will take time. To alleviate the current economic challenges, it requires more than technical macro policies, industrial policies, and financial policies. The various issues facing the Chinese economy are the result of past logic. The more complex, rigid, and fundamental the logic leading to current problems, the greater the difficulty in solving them, and the longer it will take.
Secondly, China has a large-scale economy with extremely complex aspects, including those that are industrial, urban-rural, regional, internal and external, virtual and real, as well as state-owned, private, and foreign-invested. Under the impact of internal and external factors, the pressure on various subsystems of the Chinese economy varies, with differences in performance during the post-pandemic economic recovery. For example, in 2023, China’s economic performance in the consumption sector differed significantly from that in the manufacturing sector, while the situation and operational performance of state-owned enterprises varied greatly from that of private enterprises and foreign-invested enterprises. In addition, there were also noticeable differences in the domestic and foreign economic environments and situations. While some economic sectors are recovering, many others are still declining along the inertia of the past, possibly dragging down this year’s economic performance for the country.
Thirdly, given the current situation facing China, both domestically and internationally, ANBOUND’s researchers personally tend to believe that as long as the economic situation in 2024 can stabilize and no systemic decline occurs, it can be considered favorable. Therefore, whether at the national or corporate level, the development goals set for 2024 should be rational, not overly ambitious, and economic and market laws should not be overlooked due to non-economic factors.
Finally, China’s economy faces issues in both international and domestic directions, but the latter issues are more significant and constitute the main contradiction. In recent years, the concepts of the “domestic circulation” and “dual circulation of domestic and international” have been emphasized, with a crucial background being China facing containment and pressure internationally. As a response, there is a focus on internal development, aiming to expand and deepen the domestic market, partly to offset the international setbacks and losses suffered by the Chinese economy. However, for Chinese enterprises and industries deeply involved in globalization, rushing into the domestic market not only intensifies the competition within the domestic market but also fails to effectively offset the losses suffered in the international one. In our view, while the international market losses are considerable, the fundamental solution lies domestically. Without effective reforms and breakthroughs capable of boosting overall market confidence, the relationship between the Chinese economy and the world economy may be difficult to improve.
Final analysis conclusion:
The year 2024 has just begun, and ordinary Chinese people, like everyone else, all hope that the new year will be better than the past and that the unfavorable past can truly become history. However, given the complexity of the Chinese economy, its development logic, and the strong inertia of the system, the economic issues will need to be treated with rationality and objectivity. For business entities, maintaining the status quo without further deterioration, and securing the fundamentals may be a practical strategy for weathering the economic winter.
