[Weekly Preview] Half of Provinces Lower Growth Targets for This Year; Building a Modern Industrial System to Stabilize Through Progress (AI Translation)

【周刊提前读】半数省份调降今年增长目标 构建现代化产业体系“以进促稳”

In 2023, following three years of strict COVID-19 measures, China’s economy entered a phase of recovery and exceeded the annual growth targets set at the year’s outset, largely due to a low base and rapid economic repair. However, the performance varied widely, with many provinces falling short of their original GDP targets—17 provinces missed their goals, with Heilongjiang underperforming by 3.4 percentage points and Jiangxi by 2.9 percentage points. The economic recovery was uneven, and some provinces, such as Shaanxi and Jiangxi, even recorded slower growth than in 2022. This underperformance was attributed to lingering effects of the pandemic, weaker-than-expected economic repair, and a sluggish real estate sector. In response, over half the provinces adjusted their 2024 economic growth targets downward, particularly those that missed their 2023 goals. However, some economically advanced provinces—like Zhejiang—pursued more ambitious targets to align with central government directives that “major economic provinces take on greater responsibility.” Most provinces set their 2024 GDP growth targets at 5% or higher, signaling a continued desire for stability and growth [para. 1][para. 2][para. 3][para. 4].

Despite the intentions to drive growth, the focus on investment—historically a key local lever for stabilizing growth—was noticeably less emphasized in 2024. Real estate’s ongoing weakness and the challenges around local government debt forced provinces to lower their investment growth targets. Instead, there has been a shift to accelerate the building of modern industrial systems. Provinces emphasized leveraging local industrial strengths to form advanced clusters and boost research and innovation. For example, Guangdong prioritized strengthening the manufacturing sector and technology R&D, while Anhui and Jiangxi focused on cultivating new industries such as advanced manufacturing, new energy, and biomedicine. Beijing, Shanghai, and Guangdong specifically stressed strengthening fundamental research capabilities and addressing “bottleneck” technologies [para. 5][para. 6][para. 7][para. 8].

Local government work reports reflected transformations in economic development strategies, moving away from reliance on real estate and large-scale infrastructure. Localities pledged to transform growth models and foster new engines of growth, with leaders like Yunnan’s governor acknowledging the need for comprehensive transformation in both quality and momentum. For 2024, major economic provinces consistently targeted growth rates of 5% or above, reaffirming their central role in national economic stability [para. 9][para. 10][para. 11][para. 12][para. 13][para. 14].

Regarding risk mitigation, real estate and local debt continue to drag on local economies. Completion of pre-sold housing (“guaranteed delivery”) was highlighted in several provinces, with places like Chongqing achieving up to a 90% delivery rate. Many provinces claimed to have exceeded their housing delivery targets for 2023 and set more modest goals for 2024. Alongside, local governments are implementing comprehensive debt-reduction plans and tightening investment approvals in high-risk areas. Mechanisms for restructuring, asset sales, and stricter debt management were discussed as key tools to manage fiscal risks [para. 15][para. 16][para. 17][para. 18].

Regionally, recent policy has emphasized coordinated development, balancing growth with security. Eastern and southern economic powerhouses like Guangdong and the Yangtze River Delta focused on technological innovation and integration, while strategic inland and northeast provinces shifted toward national security objectives such as food and energy security. Provinces like Inner Mongolia and Ningxia leveraged their energy resources, while northeastern provinces prioritized grain production. Increased central government and state-owned enterprise investment, particularly in high-risk provinces, was seen as a buffer to offset local fiscal constraints [para. 19][para. 20][para. 21][para. 22][para. 23].

In summary, 2023 marked a transitional year for China’s local economies as they sought to “advance through stability.” Growth targets have become more cautious amid persistent challenges, but there is a clear shift toward industrial modernization, innovation, risk control, and new forms of regional development [para. 24][para. 25][para. 26].