As the storm clouds gather in 2024, accurate economic and political forecasting using big data analytics will prove critical for Chinese policymakers working to sustain growth and stability
The Chinese economy has been in the headlines for the wrong reasons since the last few months. Its economy is facing strong internal and external headwinds from a real-estate meltdown (real estate comprises almost one-third of its economy) to geopolitical issues particularly with the United States which in its presidential election year is hell bent on restricting technology exports to China.
Nevertheless, despite the challenges the Chinese economy is expected to grow at 4.9% in 2024, down from 5.2% in 2023, according to forecasts from The Economist Intelligence Unit. While China exceeded its 5% GDP growth target in 2023 thanks to robust private consumption growth, headwinds remain in 2024.
Big Data Analytics Critical for Policymakers
As the storm clouds gather in 2024, accurate economic and political forecasting using big data analytics will prove critical for Chinese policymakers working to sustain growth and stability. Key challenges include strained public finances, jittery consumers and investors, mismatched labour markets, property sector turmoil, climate threats and a tense external environment.
“Fiscal deficits will widen significantly to fund stimulus, but centralised data-driven spending decisions are essential to maximise impact,” said Minister of Finance Liu Kun at a recent conference. Detailed data modelling helped target recent massive bond issuances toward shovel-ready infrastructure projects in disadvantaged interior provinces.
However, heavy stimulus may still prove insufficient to offset stability threats from debt-damaged local governments in poorer regions forced to axe budgets. “Granular geospatial data allows us to pinpoint localities at highest default risk for emergency state transfers,” explained NDRC risk analyst Zhao Wei.
At the Central Economic Work Conference in December, leaders prioritised restoring confidence among skittish private investors and middle-class consumers unnerved by regulatory disruptions. Cambridge-educated NBS statistician Li Jun said: “Sentiment polling and structured data from online and social media provide real-time feedback loops on policy missteps eroding household peace of mind.”
Graduate Unemployment a Worry
Unemployment among recent graduates remains worryingly elevated due to overspecialised education misaligned with actual urban job openings. “Our AI hiring models help students navigate career pathways where advanced degrees match market demand,” said career counsellor Wu Xia. “But curriculum reform informed by large-scale employment data is equally urgent,” she added.
In real estate, predictive analytics helps government housing agencies locate hidden pockets of market distress requiring intervention to prevent wider financial contagion. “High-frequency housing data aids targeted application of our monetary toolkits,” said PBOC Governor Yi Gang.
Geopolitics to Impact Foreign Investment
In the realm of foreign investment, China faces a nuanced landscape. While capital inflows are anticipated to rebound, foreign direct investment remains tentative. Geopolitical tensions and internal regulatory environments continue to shape investor confidence. This cautious approach by foreign investors reflects broader global economic trends and relations, especially with the United States.
The technology sector in China is another critical area of focus. The country is expected to make significant strides in advanced technologies, particularly in areas lagging behind the global cutting edge. Regulatory uncertainties, however, remain a key challenge. The evolving landscape of cross-border data transfer rules and artificial intelligence governance will be crucial areas to watch.
Internationally, sentiment analysis of nationalist online discourse and polling of diplomatic rhetoric hints at heightened odds of foreign policy clashes amid 2024 Taiwan elections. “Advanced econometric models assess scenarios around deteriorating relations with the US and Europe across thousands of potential inflection points,” said Scott Kennedy, China expert at CSIS.
Data and AI will prove indispensable for China’s leaders in 2024, yielding insights to defuse threats from within and beyond borders. “Information is power,” says President Xi Jinping, “and robust data analytics prevents powerlessness in turbulent times.”
China’s outlook for 2024 is one of cautious optimism. While the country navigates complex internal and external challenges, its strategic economic policies and government interventions provide a foundation for sustained growth and stability. As China continues to play a pivotal role in the global economy, its progress and adaptations in 2024 will be closely watched and will have far-reaching implications.