China has unveiled its 2024 government work report, setting the stage for a stable and proactive year aimed at sustaining economic growth and stability. With a GDP growth target of around 5 percent, the same as last year, the report signals China’s firm stance on supporting growth, employment, and overall stability.
Stable Employment Initiatives
The report targets an increase of 12 million urban jobs to maintain an unemployment rate of approximately 5.5 percent, aligning with last year’s goals. In 2023, China successfully created 12.44 million urban jobs with an average unemployment rate of 5.2 percent. To kickstart the year, the "Spring Breeze" campaign was launched in January, offering around 30 million job opportunities across various industries by early April. This initiative aims to foster a stable employment and business environment, which is expected to enhance consumption and support various segments of the commercial real estate market, including retail, hotel, and tourism-related properties.
Advancing Technology and Innovation
The report emphasizes China’s commitment to developing its innovation and technology systems to upgrade the manufacturing sector and economic structure. Focus areas include biotechnology, new materials, new energy, electric vehicles, and artificial intelligence. Notably, the export of electric vehicles, lithium-ion batteries, and solar cells surged nearly 30 percent year-on-year in 2023, underpinning China’s industrial upgrading and economic resilience. These advancements are poised to positively impact the commercial real estate sector, particularly industrial properties and business parks, with top players moving towards prime office buildings.
Boosting Domestic Consumption
Domestic consumption remains a key driver of growth, contributing 82.5 percent to the overall GDP growth in 2023. Strong consumption growth was observed during the Spring Festival holiday, despite high base effects from the early 2023 reopening. Improved market sentiment and revived demand have encouraged retailers to expand their physical presence, leading to increased revenue expectations among leading retail asset operators. This trend supports the commercial real estate market by fostering a vibrant retail sector.
Supportive Measures for Real Estate
The government reaffirmed its commitment to containing risks in the property sector by refining supportive policies and meeting developers’ reasonable funding needs. In the first two months of 2024, authorities introduced measures to boost housing sales and ease liquidity for housing projects, including a 25-basis-point cut to the five-year LPR and the launch of a whitelist mechanism for cash-strapped housing projects. These timely measures are expected to provide certainty to compliant developers and quality assets, enhancing market confidence. A sustainable growth trajectory in the residential housing market will also bolster the commercial and industrial real estate sectors, encouraging investment and development in high-quality opportunities.
Reference(s):
Positive signals restore confidence in China's commercial real estate
cgtn.com
