China reveals a double dose of disappointing data

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Good evening. China has revealed a double dose of disappointing data for the government’s ambition of reversing a gloomy economic outlook. Official figures showed the country’s population fell more than 2mn to 1.41bn last year, while its economy grew at one of the lowest rates in decades.

Gross domestic product expanded 5.2 per cent in 2023, hitting Beijing’s low-growth target of about 5 per cent, its lowest benchmark for more than 30 years. But analysts said the data highlighted the deflationary pressures and property slowdown weighing on domestic demand and confidence.

“In some senses, the strong headline number is a bit misleading,” said Fred Neumann, chief Asia economist at HSBC. “It comes off a very weak prior year and really it masks some of the underlying weaknesses that we are seeing in terms of aggregate demand.”

In 2023 China’s population decreased for a second year in a row as 11mn deaths outstripped 9mn births, a drop that was more than double that of the previous year. After China’s hasty retreat from tough Covid-19 restrictions in December 2022, tens of millions of people were being infected with the virus daily at one point.

Demographers forecast further falls as the population rapidly ages. According to Lex (for Premium subscribers), this shift may spur more job and investment opportunities via the creation of a “silver economy”, though China already faces worker shortages in its manufacturing sector as younger workers shun factory jobs.

Tough times lie ahead for 2024, with a Reuters poll of analysts predicting China’s growth will slow to 4.6 per cent.

Today’s data release prompted Chinese stocks to slide. The Hang Seng Mainland Properties index in Hong Kong fell 4.9 per cent to an all-time low, while the Hang Seng China Enterprises shed 3.5 per cent to be down 9 per cent this month.

Speaking ahead of the official data drop, China’s Premier Li Qiang struck a more upbeat tone at Davos, as he sought to reassure investors over the country’s recovery from the pandemic.

“Just as a healthy person often has a strong immune system, the Chinese economy can handle ups and downs in its performance. The overall trend of long-term growth will not change,” he said in a speech at the World Economic Forum (WEF) summit. Li’s declaration that China is open for business was paired with a veiled attack on what Beijing sees as US-led hegemony, warning of what he described as a “trust deficit” among nations.

This spoke to a huge question hanging over the WEF’s annual gathering, now in its third day. Conflicts in the Middle East, Europe and other geopolitical risks including another Donald Trump presidency have damped any economic optimism.

You can follow the action online with the FT’s free Davos Daily Show, featuring interviews and commentary on the most significant trends from the WEF, plus anecdotes from the summit’s networking parties. Or, for those less convinced of Davos’s relevance nowadays, Jemima Kelly has got you covered (you can read the full special report “the World 2024” online here).

Need to know: UK and Europe economy

Li Qiang held talks with Ireland’s Taoiseach Leo Varadkar in Dublin as part of a trip that highlighted the nations’ close trade and investment ties — and their potential vulnerability to growing geopolitical tensions.

Britain is losing out on high-spending tourists after the government scrapped tax-free shopping following its departure from the EU, according to a new data analysis.

A minister has warned business leaders there are limits to what the UK government can do to protect critical global supply chains as attacks on ships using the Suez Canal route continued this week.

Need to know: Global economy

Wage growth has slowed across major economies over the past six months, in a further sign that central banks are under increased pressure to begin cutting interest rates in the first half of the year. But, as Chris Giles writes in his latest newsletter (for Premium subscribers), noises from the Fed, the ECB and Bank of England do not suggest “central bankers will be speedy with action in 2024”.

US retail sales increased more than expected in December, as consumers kept spending over the holiday period despite high interest rates and inflation.  

The US natural gas industry is on high alert as the Biden administration reconsiders the way it licenses huge new export terminals for the fuel, under pressure from climate campaigners escalating a fight against fossil energy infrastructure.

The Consumer Financial Protection Bureau is proposing to cap overdraft fees at as low as $3, potentially saving consumers billions of dollars a year and stepping up the US president’s war on so-called junk fees ahead of the 2024 election.

Need to know: Business

City stockbrokers Panmure Gordon and Liberum have agreed to merge as a dearth of listings and deals forces the industry to consolidate. Bob Diamond and Rich Ricci, the ex-Barclays duo behind the tie-up, are hoping to defy a slump in company listings and a paucity of dealmaking.

Saudi Aramco is beefing up its global venture capital arm with a $4bn cash injection as part of a wider push to diversify the kingdom’s oil-dependent economy.

JPMorgan Chase is targeted by hackers trying to infiltrate its systems 45bn times a day — twice the rate at which it was attacked a year earlier — the bank’s head of asset and wealth management has said.

Apple overtook Samsung as the world’s top smartphone maker by volume for the first time in 2023.

Goldman Sachs and Morgan Stanley reported their lowest annual profits in four years, as the Wall Street rivals suffered from slowdowns in their investment banking and bond trading businesses.

Ben & Jerry’s board has called for a permanent ceasefire in Gaza, in a move that risks reigniting tensions with parent company Unilever over the ice-cream maker’s stance on Israeli policies.

The World of Work

In a work culture that often prizes busyness, it’s easy to forget your past achievements. One solution is storing messages of appreciation in a “smile file”, via an electronic or physical folder. “It may provide good cheer in a career slump,” writes Emma Jacobs.

Some might still wish companies spread any cheer with cash instead of compliments. The FT’s annual survey has returned to take the temperature as we approach bonus season: are you headed for a payout or a doughnut (a bonus of zero)? Please fill in our anonymous and confidential form here and the findings will be published next month.

Rewarding existing staff with job promotion — rather than bringing in fresh talent from outside the company — can bring benefits. Tune into the Working It podcast to discover the pros and cons.

Some good news

For the first time, a cloned rhesus monkey has lived into adulthood — surviving for more than two years so far.