The modest economic growth target of about 5% for 2023 announced by outgoing Chinese Premier Li Keqiang at the National People’s Congress (March 5 onwards) has offered little excitement to the investors.To get more china business market news, you can visit shine news official website.

The government’s conservative growth target, without any significant fiscal stimulus measures, signals that the pickup in China’s growth would continue to face headwinds such as slowing exports elevated jobless rate and risks associated with the property sector and local government debt. The target, which is the lowest in three decades, has poured cold water on those anticipating a strong rebound for the Chinese economy and demand for commodities.

The absence of any stimulus measures set off a slump in some China-sensitive commodities, suggesting investors had expected a stronger commitment from policymakers to use traditional tools like big spending on infrastructure projects to boost growth. The CSI 300 index of the largest listings in Shanghai and Shenzhen lost 0.5% on March 6. The property market is expected to continue to decline due to less demand going forward as many developers are in poor financial shape and many people have lost confidence in housing as a safe and profitable investment following two years of falling house prices and many stalled or cancelled projects. Many economists expect China’s exports to, at best, barely grow this year. That’s due to a drop in demand for Chinese goods as a result of slowing US and European economies. China’s trade contracted in January-February 2023, as US and European demand weakened in the face of interest rate hikes, adding to pressure on official efforts to revive economic growth. Exports sank 6.8% from a year earlier, while imports fell by 10.2%.

As exports are seen weakening well into 2023, economists say that Chinese policymakers have to rely on boosting domestic demand as the key driver for the economy this year, which would not be easy as there are still quite a few factors restraining the recovery and growth of consumption including lower incomes, reduced employment prospects, reduced spending power, and lower property values. People with poor expectations of future income and property prices have largely reduced their spending, leading to huge excess savings.

The increase in China's household deposits hit an all-time high of Yuan 17.9 trillion ($2.589 trillion) in 2022, much higher than the Yuan 9.9 trillion increase in 2021, according to the People's Bank of China. In January, this increased by Yuan 6.2 trillion from a year ago, also a record-high growth ever for the month. The youth unemployment rate has been rising in recent years and the outlook is not particularly promising since the Ministry of Education estimates that 14 million college- educated young people will be looking for work this year. Business news outlet Caixin Media estimates that only 8 million of the record 11.58 million students graduating from college this summer will find jobs. Analysts at the Trivium China policy research group believe the economy cannot grow under these demographic realities. In its Government Labour Report, China claims to have created 12.06 million new urban jobs in 2022, with an urban unemployment rate of around 5.5% in December. However, experts noted that most of those jobs were temporary, offered by local governments in a year marked by mandatory confinements and massive Covid-19 testing campaigns. Construction activities are not expected to pick up in the first half of 2023 due to the slowing of infrastructure projects, so it means some of the low-income groups may struggle to land jobs or find jobs that will increase their wages, further widening the wealth gap in China. China still faces several social challenges in 2023, including a falling birth rate and high youth unemployment. An aging population and shrinking labour force pose serious problems for the world’s second-largest economy, which has based its growth on a vast and inexpensive labour force for decades. China’s labour force has steadily declined since it peaked in 2014 at nearly a billion people. In July 2022, the United Nations announced that the number of working-age Chinese will not exceed 400 million by the end of this century. This will add pressure to the pension system, which offered basic coverage to 1.053 billion people as of December 2022. Several signs of discontent, like workers demanding pension rights and Chinese retirees staging rare protests in February against cuts in their monthly medical allowances, would negatively affect investment and consumption. Some local governments are also finding economic recovery difficult and facing prominent fiscal imbalances. Some of China's provincial-level governments have announced reduced growth targets and policy goals for 2023 as compared to previous years, indicative of the fact that China's economic slowdown has become a cause of worry for its government. Beijing and its neighbouring municipality of Tianjin are aiming for lower growths of around 4.5% and 4% respectively. How much China’s growth will slow in the coming years is a key question related to the direction of the country under the increasingly centralized leadership of President Xi, whose tenure has been marked by a focus on restoring China to so-called great power status in the face of persistent economic headwinds. Whereas Premier Li favored an economics- driven, numbers-based approach to running the country, Xi has demonstrated greater Communist policy adherence, favoring centralized command. Before last year's economic downturn, Xi had begun to explore Maoist-themed initiatives to running the country, curbing the influence of the private sector and imposing a series of fines and penalties for perceived corporate abuses.