Top analyst predicts China's economy will slow without clear growth drivers

According to Shehzad Qazi, the managing director of China's Beige Book, China's growth is expected to slow further in 2024 as no sector is poised to drive a broad rebound. Qazi stated in an interview with CNBC that there is currently no obvious growth driver in China, and overall growth will continue to decelerate. He believes that 2024 will be slower than 2023 in terms of economic growth.

While some parts of the economy may offer support, investors should not expect a single industry to lead China's recovery. For example, although demand in foreign markets could help sustain the manufacturing sector, it is not expected to reverse this year's wider decline.

In the past, China's property market played a crucial role in driving economic growth, accounting for nearly 70% of total household wealth and around a quarter of Chinese GDP. However, the sector has been hit hard by heavy debt burdens and a series of defaults, including the recent failure of high-profile developer Country Garden to meet a bond payment. Qazi emphasized that the property market will not return to its previous role as a major driver of GDP and economic growth, as real estate prices are currently at record lows.

Qazi noted that some improvement may be seen in the first half of next year, as support measures such as lower mortgage rates begin to take effect. However, it is unlikely that Beijing will provide a comprehensive rescue of the real estate sector, as authorities aim to avoid reinflating the property bubble.

Qazi's outlook is in line with institutions like the World Bank and the International Monetary Fund, which also anticipate further stalling of China's GDP growth in the coming year. The IMF projects a growth rate of 4.6% in 2024, compared to this year's 5.4%.

Investors may have been disappointed this year after overestimating China's rebound following the lifting of COVID-19 lockdown policies. While the country experienced some organic recovery in the second and third quarters, it has once again lost momentum, according to Qazi.


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