Objectively understanding China's development progress

China's recently announced 2024 GDP growth target of "around 5 percent" has reignited discussions about the country's economic prospects, with some claiming it has "peaked," while other analysts argue that this is simply a false claim.

According to a commentary on Yuyuan Tantian, a social media account affiliated with China Media Group, the narrative that China's economy has reached its peak simply echoes past claims of an impending "collapse" and relies on superficial comparisons.

The article argues that focusing solely on indicators like the ratio of China's GDP to the U.S.'s, without considering deeper analysis of factors like inflation and exchange rates, paints an inaccurate picture.

For example, the U.S.'s recent high inflation has inflated its nominal GDP, while a stronger dollar makes China's yuan-denominated GDP appear smaller in dollar terms, it said.

This claim that China's economic growth has peaked is not new. 

The article pointed out that similar pronouncements, like the "middle-income trap" argument that was popularized around 2010, have been repeatedly proven wrong. China's continued development and approach to high-income status demonstrate the fallacy of such narratives.

The article further criticizes past attempts to make comparisons for China across various metrics – population with India, total output with the U.S. and growth rate with Vietnam – all supposedly leading to the same conclusion of an imminent peak. 

The implication, it argued, is that China will inevitably face the same problems as other countries, regardless of the specific context of each country.

The Yuyuan Tantian article also delved into the magnifiers of this negativity, pointing to overseas social media, particularly platforms like X and Reddit, where discussions about China's economy peaked in January 2023 or September 2023. Notably, 40 percent of these discussions focused on real estate, fueling the property "bubble" narrative.

However, the article countered this claim by asserting that China is still in the late stages of urbanization, with significant potential to utilize this trend to further stimulate domestic demand.

It cited the views of Gao Shanwen, chief economist at SDIC Securities, who said that the current real estate situation represents a price correction and not a bursting bubble. The article then discusses the evolving landscape of the real estate sector, highlighting new opportunities amidst adjustments. 

According to the article, Dong Jianguo, vice minister of housing and urban-rural development, pointed out the shift away from new housing driving the market to a larger role for existing housing. While this may impact upstream industries like steel and cement, it opens doors for downstream sectors like furniture, appliances and home improvement, he added.

The article concluded by emphasizing that China's confidence in its economic future stems not from comparisons with others or external validation, but from its own unique path and problem-solving approach driven by its specific realities.