Opinion | How to read China’s economic report card for the first 5 months of 2024

As the first half of 2024 comes to an end, the state of China’s economic recovery is a mixed bag of joy and concern. The positive aspect is that multiple economic indicators show a significantly better growth trend compared to the same period last year. However, what is worrisome is that consumers, investors and entrepreneurs still lack confidence in the economic outlook.

Traditionally, three of the leading drivers behind China’s economic growth have been consumption, investment and exports. Economic indicators related to these factors in the first five months of the year have shown a clear improvement compared to 2023.

Overall investment has been recovering at a slower pace but, if we excluded real estate, the situation is clearer. In the first five months, national fixed asset investment grew 4 per cent year on year, but the modest rate is mainly due to a 10.1 per cent decline in real estate investment. In 2021, this sector accounted for nearly 27 per cent of total fixed-asset investment, declining to 22 per cent in 2023.

Second, in the first five months, the import and export of goods increased by 6.3 per cent in yuan terms, with exports growing by 11.2 per cent in May. This indicates the recovery of the global economy has boosted demand for Chinese products.