China’s government is targeting an economic expansion of approximately 5% again this year. A challenging objective considering the myriad of challenges facing the world’s second-largest economy. 

These challenges include weak consumer spending, a real estate sector in turmoil, efforts by the US to limit its technological advancements, unprecedented youth unemployment rates, and significant debt levels among local governments.

While China achieved its growth goal of about 5% in 2023, replicating this success will be difficult, particularly due to Covid base effects. Government nevertheless seems adamant in succeeding, and Chinese manufacturing looks set to receive the leadership’s favor.

Chart 1: No way back for Chinese RE