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China facing 'challenges' in reviving economy, leaders say

BEIJING, China, December 13 ------ China is confronting "difficulties and challenges" to its recovery, Beijing's leadership said, according to state media, as the world's second-largest economy charts an uneven rebound from the pandemic.

The annual closed-door meeting of Beijing's top decision-makers -- dubbed the Central Economic Work Conference -- comes as China's economy battles headwinds on multiple fronts, from waning consumer demand to a debt crisis in its property sector. "China still has to overcome some difficulties and challenges to further revive the economy," top leaders, including President Xi Jinping, noted at the meeting, state news agency Xinhua reported.  

At the Monday to Tuesday meeting, top officials "decided priorities for the economic work in 2024" and Xi gave a speech, Xinhua said. "It was noted at the meeting that China's economy has achieved a recovery," the report said. And according to the officials present, "favourable conditions outweigh unfavourable factors in China's development", state media reported. "The fundamental trend of the economic recovery and long-term positive outlook has not changed," Xinhua quoted them as saying. Last week, Xi warned the country's economic recovery remained "at a critical stage", and ordered measures to boost demand and "defuse" risks. Exports rose in November for the first time in seven months, although the reading compared with a low base from last year when the impact of draconian Covid policies was being felt the most. Chinese exports -- long a key growth driver -- had largely been in decline since last October, except for a short-lived rebound in March and April. A surprise drop in imports in November also highlighted weak consumer activity at home. And figures last week showing the country's slide into deflation accelerated in November also painted a grim picture. Officials said the decline was linked to "downward fluctuations in the prices of energy and food".


 Ratings agency Moody's last week downgraded the outlook on the country's credit rating to negative from stable, citing "broad downside risks to China's fiscal, economic and institutional strength". Beijing's finance ministry insisted concerns about China's economy were "unnecessary". Woes in the property sector -- another traditional engine of growth -- remain one of the largest sources of worry. China's vast real estate industry is mired in a deep debt crisis, with some of the nation's biggest developers owing hundreds of billions of dollars and facing going out of business. Authorities are on edge as debt fears stoke buyer mistrust, send home prices plummeting and, crucially, threaten to infect other sectors. Construction and real estate account for around a quarter of China's gross domestic product. China is aiming for "around five percent" growth this year -- from a low base last year when the domestic economy was paralysed by strict Covid restrictions. But Beijing faces an uphill battle to achieve that target, with authorities under pressure to offer greater support after issuing sovereign bonds worth 1 trillion yuan ($137 billion) in October.



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