Chinese Firms Fall as Chinese Economy Stalls

Global markets get a fresh dose of fear as Chinese GDP lags expectations

BREAKING NEWS

China’s GDP growth stalled out to end 2023—only growing 5.2% YoY. This missed expectations and added to fears that China is facing a full-blown structural decline. Let’s unpack the fallout here: 

WHAT HAPPENED

While some parts of the Chinese economy are trending in the right direction—the country has a long way to go to fully recover from the COVID lockdowns that rocked their markets since 2020. GDP grew 5.2% in Q4 of 2023, which slightly lagged estimates of 5.3%. 2023 handily beat 2022’s 3% growth, but after the Chinese economy turned borderline-deflationary midway through the year, analysts want to see the Chinese market overcorrect and beat expectations. 

YOUTH THAW

After a dark handful of months where the Chinese government outright stopped reporting youth unemployment—this GDP data included a 14.9% youth unemployment rate. 

Meanwhile, some bright spots in the Chinese economy include a strong recovery of retail sales—growing 7.4% YoY and industrial production beating expectations. Production managed to notch 6.8% growth. 

WHY IT MATTERS

It has been a messy recovery for China ever since they rapidly exited their COVID protocols a little over 13 months ago. China’s population decline accelerated this year—dropping 2 million people in 2023 after a milder fall of 850,000 in 2022. That decline is the most dangerous long-term trend for an economy that’s working hard to recover. While China looks to be fending off a full-blown collapse, this growth wasn’t enough for Chinese firms like PDD and Alibaba, who all slumped on growth fears.