China's economy grew 5.2% in 2023, albeit in a worryingly uneven recovery period. Hang Seng falls.

HONG KONG (`) — China's economy grew faster in the October-December quarter, allowing the Chinese government to meet its target of about 5% annual growth for 2023, even as trade data and economic recovery remain mixed.

Official data released on Wednesday showed China's economy grew 5.2% in 2023, exceeding the government's target of “about 5%.” However, the data fell short of some analysts' expectations of 5.3% growth, according to Reuters and Bloomberg polls. Hong Kong's Hang Seng index HK:HSI fell 3%.

Growth for 2023 is likely to be supported by GDP of just 3% in 2022 as China's economy slowed due to COVID-19 and nationwide lockdowns during the pandemic.

In the fourth quarter, China's gross domestic product also grew by 5.2% compared to the same period last year. On a quarterly basis, the economy grew 1% in the fourth quarter, slowing from the 1.3% expansion in the July-September quarter.

Officials from China's statistics bureau said measures such as “strengthened macroeconomic regulation and redoubled efforts to expand domestic demand, optimize the structure, enhance confidence, and prevent and defuse risks” helped boost the momentum of the recovery, supply and to improve demand.

Industrial production, which measures activity in the manufacturing, mining and utilities sectors, rose 4.6% in 2023 from a year earlier, while retail sales of consumer goods rose 7.2%.

Fixed investment – ​​spending on factory equipment, construction and other infrastructure projects to support growth – rose 3% in 2023 compared to the previous year.

China also resumed publishing official data on its youth unemployment rate on Wednesday after a six-month suspension. Under a new method that excludes students from the unemployment rate, unemployment for people ages 16 to 24 was 14.9%, an improvement from the record youth unemployment rate of 21.3% in June under the previous method.

Officials said the new methodology's exclusion of current students better reflects the employment of “young people entering society.”

However, indicators point to a largely uneven recovery in China. December trade data released earlier this month showed slight growth in exports and a slight increase in imports for the second month in a row.

However, consumer prices fell for the third straight month as deflationary pressures continued.

Julian Evans-Pritchard of Capital Economics said China's “recovery clearly remains shaky.”

“And while we still expect a short-term boost from policy easing, it is unlikely that this will prevent a renewed slowdown later this year,” Evans-Pritchard wrote in a note, adding that for China “ “It will be much more difficult” to achieve this in 2024, reaching the same pace of expansion.

Chinese Premier Li Qiang said at the World Economic Forum on Tuesday that China had achieved its economic target without resorting to “massive stimulus measures.”

He said China has “good and solid fundamentals for its long-term development” and despite some setbacks, the positive trend for the economy will not change.

The ruling Communist Party has consciously sought over the last decade to shift from a reliance on state-led investment in huge infrastructure projects to a more consumer demand-driven reliance, typical of other major economies.

The slowing growth reflects efforts to find a more sustainable path to prosperity, but disruption from the pandemic and a crackdown on excessive borrowing by property developers have exacerbated underlying weaknesses.

MarketWatch contributed to this report.