Chinese Prime Minister Li Qiang expressed confidence in achieving the nation’s economic goals for 2024, despite facing challenges in post-Covid recovery, including the lowest quarterly growth in 18 months. The government is exploring stimulus measures like interest rate cuts and relaxed housing rules. Tensions with the EU and U.S. over trade issues, particularly tariffs on electric vehicles, remain significant. China is also considering retaliatory tariffs on French cognac, amidst ongoing trade discussions.
China’s Economic Outlook for 2024
On Tuesday, Chinese Prime Minister Li Qiang conveyed his unwavering belief in the nation’s capacity to meet its economic targets for 2024, hinting at the possibility of new stimulus initiatives. The government aims for a GDP growth rate of approximately 5% this year; however, the post-Covid recovery has faced challenges, leading to the lowest quarterly growth in a year and a half from July to September.
To revitalize the economy, officials have introduced measures such as interest rate reductions and relaxed housing purchase restrictions. Nonetheless, many analysts have voiced concerns over the absence of a comprehensive stimulus plan thus far. A formal announcement regarding these measures might emerge soon following a meeting of the Standing Committee of the National People’s Congress, the apex of China’s legislative body.
During the opening ceremony of the China International Import Expo (CIIE) in Shanghai, Li stated, “We are fully confident in achieving this year’s goals and in the growth of the Chinese economy in the coming period.” As the head of economic policy, he acknowledged the existing downward pressures but emphasized that there remains potential for both fiscal and monetary interventions.
Challenges and Trade Tensions
Despite a recent uptick in stock market performance due to hopes for a significant stimulus, optimism has diminished as market players deem the current policies insufficient. Nevertheless, there are encouraging signs, with factory activity showing an increase last month for the first time since April, according to recent official reports. Additionally, service sector activity also picked up in October, bolstered by an independent index from S&P Global and Chinese media.
However, the Chinese economy is grappling with significant challenges, particularly rising trade tensions with key partners like the European Union and the United States. Li reiterated China’s commitment to further opening its doors to foreign investment while cautioning against the dangers of unilateralism and protectionist policies.
In a bid to counteract these tensions, China has expressed discontent with tariffs placed on its electric vehicles by the EU and the U.S., labeling them as protectionist measures. In retaliation, Beijing is considering imposing tariffs on European brandies, notably affecting French cognac, which makes up 95% of this market. Since mid-October, new regulations have required importers to deposit bonds with customs.
French Minister Delegate for Foreign Trade, Sophie Primas, remarked that negotiations with Beijing regarding cognac remain “clearly open,” signaling a potential path forward despite the existing trade friction. While visiting the France pavilion at the CIIE, she expressed concerns for the cognac industry but noted the longstanding relationships that could facilitate continued dialogue with China.