China's economy expanded 5.2% last year, hitting the government's target despite an uneven recovery

HONG KONG — China's economy grew at a faster pace for the October-December quarter, allowing the Chinese government to meet its target of 5% annual growth for 2023, despite a patchy trade data and economic recovery.

Official data released on Wednesday showed the Chinese economy growing at 5.2% for 2023, beating the government's target of 'around 5%'.

Growth for 2023 will contribute just 3% of GDP in 2022 as China's economy slows due to COVID-19 and nationwide lockdowns during the pandemic.

In the fourth quarter, China's gross domestic product increased by 5.2% compared to the same period last year. On a quarterly basis, the economy expanded 1% in Q4, slowing from a 1.3% expansion in the July-September quarter.

Officials from China's National Bureau of Statistics said measures including „strengthening macro regulation, expanding domestic demand, improving infrastructure, increasing confidence, and preventing and reducing risks” helped improve the pace of recovery, supply and demand.

Industrial production, which measures activity in the manufacturing, mining and utilities sectors, rose 4.6% in 2023 from a year earlier, while retail sales of consumer goods rose 7.2%.

Fixed asset investment — spending on industrial equipment, construction and other infrastructure projects that fuel growth — grew 3% annually through 2023.

China began releasing official data on its youth unemployment rate on Wednesday after a six-month hiatus. Under a new system that excludes students from the unemployment rate, unemployment for 16- to 24-year-olds was 14.9%, up from a record-high youth unemployment rate of 21.3% in June using the previous system.

Officials said the new system's exclusion of current students would more accurately reflect the employment of „young people entering the community.”

However, indicators point to a largely uneven recovery for China. Trade data for December, released earlier this month, showed slight growth in exports for the second straight month and a slight increase in imports. However, consumer prices fell for a third consecutive month as deflationary pressures persisted.

Julian Evans-Pritchard of Capital Economics said China's „recovery is clearly shaky”.

„We still expect some temporary boost from policy easing, which is unlikely to prevent a renewed slowdown later this year,” Evans-Pritchard wrote in a note, adding that it would be „very challenging” for China. Reach the same pace of expansion in 2024.

Chinese Premier Li Keqiang told the World Economic Forum on Tuesday that China had achieved its economic goal without resorting to „massive stimulus”.

He said China's long-term growth has „good and solid fundamentals” and that despite some setbacks, the positive trend for the economy will not change.

The ruling Communist Party has spent the past decade deliberately moving away from relying on government-led investment in massive infrastructure projects to become one driven more by consumer demand, like other major economies.

Slower growth reflects an effort to achieve a more sustainable path to prosperity, but disruptions from the pandemic and excessive borrowing by property developers have accentuated underlying weaknesses.