Emerging sectors, such as new energy and health services, are supporting growth amid a transition toward a higher-quality economy, but traditional industries are sceptical if they can follow suit.

“I’m not even expecting any expansion in business this year. It would satisfy me if it remains at the same level as last year,” said He, who has been in the trade for over a decade.

“In the past couple of years, the total business revenue has been on the decline, and people are showing a preference for cheaper and lower-end cars,” added He, who expects the trend to continue for the foreseeable future.

He said that it would be “quite unlikely” for his income to increase in line with the government’s goal.

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But it is a different story for Lu Yiming, co-founder of two rehabilitation centres in the neighbouring city of Shanghai.

He expects business volumes to double in the coming year due to fast-growing demand for more sophisticated healthcare services.

“We haven’t seen the hesitance to spend as shown in traditional consumer goods caused by falling incomes or a lack of confidence,” he said.

“Instead, people are showing an increasing awareness and willingness to pay for rehabilitation services.”

02:31

China GDP: Beijing’s long to-do list to boost its economy in 2024

China GDP: Beijing’s long to-do list to boost its economy in 2024

While admitting serious headwinds in 2024 for the world’s second-largest economy, Beijing has reiterated that the new growth target is in line with its 14th five-year plan for 2021-25, and matches the potential for economic growth.

Zheng Shanjie, head of the National Development and Reform Commission, told a briefing during the “two sessions” parliamentary meetings in March that the growth target was achievable, and that China was expected to have a good first quarter. It is set to release its first quarter gross domestic product (GDP) figure on Tuesday.

And economic activity data so far this year has already shown some signs of stabilisation, although economists said it would still need more policy support to improve growth momentum.

Some international organisations and investment banks, though, have already lifted their economic growth forecasts despite the strong headwinds.

A survey of 14 organisations by financial data provider Wind showed an average forecast of 4.9 per cent for year-on-year GDP growth in the first quarter, with Goldman Sachs this week revising up its projection from 4.5 per cent to 5 per cent, citing manufacturing strength.

And a sense of uncertainty still prevails among private businesses following simulative measures announced at the two sessions, which many found to be inadequate.

Betty Ma, a senior manager at a Nanjing-based start-up focusing on development of endoscopes, said her company secured 200 million yuan (US$27.7 million) in a new round of funding at the end of last year despite an ongoing anti-corruption campaign targeting medical sectors that has triggered widespread concerns.

“Overall, the medical instrument industry is set to grow this year, though the scale of growth is uncertain, as things remain quite complicated so far,” she said.

Former World Bank chief economist Justin Lin Yifu emphasised the importance of lifting sentiment in the private sector to achieve the 5 per cent growth rate.

Expecting weak external demand to continue this year, he said at a seminar in Peking University last month that investment from private companies would be most directly impacted.

“To truly restore the confidence of private enterprises, we need to respond to the overall external economic downturn, which is unfavourable to us,” he said.

To meet the growth target, China must roll out more proactive fiscal policies and a “flexible and appropriate” monetary policy to support necessary investments, he added.

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China also needs to prevent an ailing property market from becoming a prolonged drag on the entire economy, other economists and industry insiders warned.

A slide in the property market, which used to be a key driver of China’s GDP growth, is now deep into its third year, but there is still no end in sight, said Linda Wen, a sales director at a real estate developer in Zhejiang.

“It would take several years to digest the inventory even if transactions double or triple and nothing new is built,” she said, referring to activity in the county-level city of 1.1 million people where she works.

“We’re still not seeing the bottom of the market. What we’re sure about is that buyer confidence has not returned.”

“Unsurprisingly, a key slogan ‘homes are for living not speculation’ did not make an appearance in the government work report. This slogan was previously seen as symbolic of restrictive property market policies,” Lynn Song, chief economist for Greater China at ING, said last month.

“The property sector will likely remain a prolonged drag on growth, but we do not see it boiling over into a full-blown crisis,” he said.

In Shanghai, an air conditioner retailer said a slumping housing market was still clouding her business.

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“We survived 2023 with slight growth from the previous year, but this year seems to be bad so far – we have no big project at hand yet,” said Fang Hua, whose company sells the electrical appliance in bulk to real estate projects.

Like car salesman He, Fang doubts if China’s campaign to encourage replacement of old home appliances and vehicles can spur consumption to a new level.

Amid plunging exports and weak investments, consumption contributed 82.5 per cent of GDP growth in 2023, but it appears it would be hard for the sector to continue carrying the load this year to achieve the 5 per cent growth target amid a slowdown in retail sales.

And it is feared the so-called new-three will lose momentum in the coming year due to overcapacity and subdued demand in the West.

Tan Junyu, regional economist for North Asia at Coface, said that as the release of pent-up demand following China’s cancellation of its zero-Covid policy gradually weakens, the main driver of economic growth should shift from consumption to investment in 2024.

“Public investment will therefore become a decisive factor in achieving the annual growth targets,” he said.

“But the fiscal support announced looks a bit modest for a strong increase in public investment.”

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Enhanced support for investment in the new economy sectors, such as digital transformation and energy transition, should help make up for the shortfall in housing investment, while promoting the government’s pursuit of high-quality growth, he added.

Lu Ting, chief China economist at Nomura, said Beijing has to do more to achieve its “very challenging” goal.

“To reduce credit risks and alleviate resource misallocation in those high-risk regions, Beijing must be resolute in its efforts to contain their debt growth and offer them larger quotas to issue special refinancing bonds to swap hidden debt,” he added.

Additional reporting by Sylvia Ma