Chinese President Xi Jinping has acknowledged the difficulties faced by some companies and citizens in 2023 and has vowed to strengthen the country's economic momentum and deliver on job creation. In a rare admission of the headwinds China is facing, Xi emphasized the need to achieve steady and long-term economic development and to improve the well-being of the people.
China is entering a pivotal period as it seeks to boost growth, stabilize the crisis in the property market, and prevent deflation. The government is expected to target a growth goal of around 5% in 2024, although this may prove challenging due to a higher base. Concerns over Beijing's opaque policymaking and capital outflows caused by higher interest rates overseas have led to a plummet in investor confidence. Additionally, the recent crackdown on the gaming industry resulted in an $80 billion meltdown, and foreign investors made their smallest-ever annual purchases of Chinese stocks.
The Chinese economy has shown signs of weakness, with factory activity shrinking in December to the lowest level in six months. This has increased the pressure on policymakers to urgently inject impetus into the economy. Xi highlighted China's manufacturing prowess in his address, citing achievements such as the domestically-built C919 passenger jet, a made-in-China cruise ship, space programs, manned submersibles, and electric cars.
In the past year, President Xi has broken Communist Party norms by making only four overseas trips, the fewest in a non-pandemic year since he took power. He also delayed a key economic meeting that outlines the country's reform, and made abrupt leadership changes in the military, removing the defense minister and top rocket force leaders.
The new year brings its own geopolitical risks, including elections in the US and Taiwan. Xi reiterated China's determination to reunify with Taiwan, which split from the mainland in 1949 but is still claimed by Beijing. Taiwan's upcoming election on January 13 will determine the island's response to China's moves. The incumbent Democratic Progressive Party seeks closer ties with Washington, while the opposition Kuomintang is Beijing's preferred negotiating partner.
Xi emphasized the need for unity among Chinese people on both sides of the Taiwan Strait and called for shared participation in the rejuvenation of the Chinese nation. As China faces various challenges and uncertainties in 2024, the government's focus will be on bolstering economic recovery, promoting job creation, and ensuring the well-being of its citizens.