China\u2019s president, Xi Jinping, acknowledged in his\u00a0new year\u2019s message\u00a0that \u201csome enterprises had a tough time\u201d in 2023 as data showed a weakening of factory production deepened this month, but he vowed to step up the pace of the economy\u2019s recovery.<\/p>\n\n\n\n
Speaking on TV, Xi said: \u201cAlong the way, we are bound to encounter headwinds. Some enterprises had a tough time. Some people had difficulty finding jobs and meeting basic needs.\u201d<\/p>\n\n\n\n
The Chinese leader also reiterated his\u00a0intention to annex Taiwan, a self-governing democracy which Beijing claims is a Chinese province, saying it will \u201csurely be reunified\u201d.<\/p>\n\n\n\n
The world\u2019s second-biggest economy\u2019s recovery remains sluggish, held back by a severe property slump, lacklustre global demand and\u00a0record youth unemployment. Evergrande, once China\u2019s biggest developer, has embarked on a painful\u00a0debt restructuring process, while Country Garden, its main rival, defaulted in October.<\/p>\n\n\n\n
China\u2019s factory activity shrank more than expected in December after a decline in new orders.<\/p>\n\n\n\n
Clouding the economic outlook, the worse-than-expected figures boosted expectations of fresh stimulus measures in the new year.<\/p>\n\n\n\n
Xi said China would \u201cconsolidate and enhance the positive trend of economic recovery, and achieve stable and long-term economic development\u201d.<\/p>\n\n\n\n
In 2024, the 75th anniversary of the founding of the People\u2019s Republic of China, \u201cwe will consolidate and strengthen the momentum of economic recovery, and work to achieve steady and long-term economic development. We will deepen reform and opening up across the board,\u201d he said.<\/p>\n\n\n\n
The authorities have\u00a0cracked down on negative commentary\u00a0to boost public confidence.<\/p>\n\n\n\n
China\u2019s official manufacturing purchasing managers\u2019 index (PMI), a closely watched survey, fell to 49 in December from 49.4 in November, below the 50 mark that divides growth from contraction. This marked the third month of declines and was the weakest reading since June.<\/p>\n\n\n\n
New orders were the main drag, sliding to 48.7, while export new orders also worsened, with a reading of 45.8. Production remained in expansion territory but edged lower to 50.2.<\/p>\n\n\n\n
\u201cWe must step up policy support, otherwise the trend of slowing growth will continue,\u201d said Nie Wen, an economist at Hwabao Trust. Nie expects the central bank to cut interest rates and banks\u2019 reserve requirement ratios in the coming weeks. \u201cFalling prices have greatly affected companies\u2019 profits and further affected people\u2019s employment and incomes. We may see a vicious cycle.\u201d<\/p>\n\n\n\n
China\u2019s central bank said on Thursday that it would step up measures to support the economy and encourage a rebound in prices, amid signs of\u00a0intensifying deflationary pressures. Top Chinese leaders also pledged to take more steps next year at a meeting to chart the economic course for 2024 earlier this month.<\/p>\n\n\n\n
Kevin Lam, senior China economist at Pantheon Macroeconomics, said: \u201cOverall, the impact of the recent fiscal stimulus is yet to be felt in the economy. We are still not seeing the reconstruction-related demand being filtered through to the manufacturing sector.<\/p>\n\n\n\n
\u201cExternally, demand conditions from China\u2019s key trading partners \u2013 the US and EU \u2013 are expected to be sluggish in the near term, thanks to elevated interest rates prevailing in those economies. This will further hamper manufacturing production in China \u2026 We continue to expect China to rely on fiscal policies, mainly through the fixed asset investment channel to stabilise growth, but don\u2019t expect bazooka stimulus seen during the global financial crisis.\u201d<\/p>\n\n\n\n
China\u2019s non-manufacturing PMI, which includes services and construction, rose to 50.4 in December, indicating a modest expansion. The construction index rose to 56.9 in December, as many companies rushed to complete their construction projects before lunar new year in February.<\/p>\n\n\n\n
Xi\u2019s address also included slightly stronger language than last year in relation to his wish to annex Taiwan.<\/p>\n\n\n\n
\u201cChina will surely be reunified, and all Chinese on both sides of the Taiwan Strait should be bound by a common sense of purpose and share in the glory of the rejuvenation of the Chinese nation,\u201d he said, according to the official English translation.<\/p>\n\n\n\n
Last year, Xi spoke only of people on either side of the Strait being of the \u201csame family\u201d.<\/p>\n\n\n\n
Xi has said he will not renounce using force to achieve what he calls \u201creunification\u201d of China and Taiwan. In recent years he has overseen an increase in military, diplomatic, and economic coercion in an effort to put pressure on Taiwan. A majority of Taiwan\u2019s people and the three main parties vying for presidency all reject the prospect of Chinese rule.<\/p>\n\n\n\n