China’s economy should recover steadily in 2024, supported by well-calibrated and targeted monetary, financial, and fiscal policies. The banking sector is sound and overall credit conditions should improve. Conditions in the real estate sector remain challenging but the sector is expected to bottom out soon and recover gradually as policy measures introduced since the second half of 2022 gain more traction. Policy space to safeguard macro stability and support the economic recovery remains sizable, despite the large fiscal stimulus over the past few years.

Looking ahead, given China’s sound macro fundamentals, the country should step up its efforts to pursue high-quality growth that is resilient, inclusive, and sustainable. Challenges related to population aging, high leverage, and geoeconomic fragmentation should be addressed.

These conclusions are highlighted in the 2023 Annual Consultation Report on China.