Analyst Says China's Economic Downturn To Deepen In 2024: 'Will Be Slower Than 2023'

The Chinese economy is anticipated to experience a more severe slowdown in 2024, with no industry in a position to propel a widespread recovery, according to the managing director of China’s Beige Book.

What Happened: Shehzad Qazi, China’s Beige Book managing director, suggested in a CNBC interview on Thursday that China lacks a clear growth catalyst, reported Business Insider.

 “So you’re going to have overall growth continuing to slow. I believe that 2024 will be slower than 2023 was,” he said.

Although sectors like manufacturing might benefit from ongoing foreign demand, these are not expected to counterbalance the broader economic downturn. The real estate market, which previously played a crucial role in China’s economy, is unlikely to regain its position due to significant debt and numerous defaults.

Qazi stated, “Property will never go back to being the type of big massive driver of GDP and economic growth that it used to be,” acknowledging that real estate prices have plummeted to all-time lows.

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While a slight recovery may be observed in the first half of 2024, expecting Beijing to entirely salvage the real estate industry is unrealistic. This view is consistent with the World Bank and International Monetary Fund (IMF) which forecast a further slowdown in China’s GDP in 2024.

The IMF projects China’s growth will decline to 4.6% in 2024, down from 5.4% in 2023. Qazi suggests investors overestimated China’s economic recovery post-COVID, causing disappointment as the recovery slowed.

Why It Matters: Earlier this month, one hedge funder, Kyle Bass, said China was experiencing a "full banking system collapse." The country’s debt has been mounting, with local Chinese government debt surpassing $12 trillion or over 75% of the nation’s entire economic output.

Moreover, investors have been questioning the attractiveness of Chinese stocks and emerging markets. This comes as financial giants like Goldman Sachs had high hopes for a robust rally in China’s stock market, which was expected to be spurred by the end of China’s strict COVID-19 measures.

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