China's 10 industries' outlooks for 2024

In 2023, China's economic recovery improved with industries experiencing different situations. Looking ahead to 2024, these sectors will face different changes, with some of them continuing to prosper, some recovering, while a few of them needing to accelerate transformation.

Here are 10 industries' outlooks reached by Shanghai Securities News.

New energy vehicle

The total vehicle sales in Chinese market will hit 31 million units in 2024, up 3 percent year-on-year, and the new energy vehicle sales will reach 11.5 million units, seeing an increase of 20 percent year-on-year, according to the China Association of Automobile Manufacturers.

In terms of exports, the nation is expected to export 5.5 million vehicles in 2024, said the association.

Zhang Yongwei, secretary-general of the China EV 100, said China's NEV export will reach 1.8 million units in 2024, surging 50 percent year-on-year.

Industry insiders are optimistic on medium and high-end NEVs, and the NEVs' export will remain the model of "trade plus overseas production", and gradually change to the model of "overseas investment plus localization development".

The new car orders are full, and the production line is running 24 hours a day, said Shanghai Securities News, citing new energy vehicle firms, including Seres and Voyah.

During the last week of 2023, several new energy vehicle makers, such as Geely's Zeekr and BAIC's Arcfox, launched new models, as well as Chinese tech giants, including Huawei and Xiaomi, also released new models. All of these new energy vehicles will be delivered in 2024.

The auto industry will completely enter the era of intelligent electric vehicles in 2024, and the gap between Chinese companies and Tesla will narrow, said Li Xiang, founder and CEO of Li Auto.

Li Bin, founder and chairman of Nio, said Chinese high-end NEV market will usher in an inflection point of explosive growth, and will split Chinese market share of international car enterprises such as Mercedes-Benz and BMW.

The pure electric vehicle is expected to become mainstream in 2024, said the newspaper, citing executives of some car companies.

Although the NEV market is promising in 2024, the overall industry will face operating pressures, with most of the NEV companies failing to turn profit, the industry competition will become more intense, and the tail firms will be left behind at an accelerated pace, said Cui Dongshu, secretary-general of the China Passenger Car Association.

Lithium battery

After experiencing price slump in 2023, the year-on-year decline in the price of lithium carbonate will significantly narrow in 2024 and even see a considerable rebound, some industry insiders said.

Due to overcapacity, the price of the whole industrial chain still has room for decline, said executives in charge of some leading lithium battery enterprises.

A "neijuan", or fierce market competition, will give rise to truly innovative and globally competitive companies, said Xiang Guangda, board chairman of stainless-steel producer Tsingshan Holding Group.

Liu Jincheng, chairman of EVE Energy Co, said the industry will be more stable in the future after experiencing a round of boom and bust, the price will be stable as well as the operation will be more rational.

The high-end electric vehicle rise will drive the upstream lithium battery industry chain out of the situation of only pursuing low prices in a certain extent, and the high-quality product is the key, said industry insiders.

Artificial intelligence

Artificial intelligence commercialization will speed up in 2024 as the underlying general large-scale model technology gradually matures.

In the field of To C (to customer), the AI product with social attributes is easily to be explosive in the short-term.

The small companies with light burdens are more likely to have eye-catching solutions during the industry model in disruptive innovation, said Kunlun CEO Fang Han and Baichuan Intelligent Technology founder Wang Xiaochuan.

Based on advantages in technologies and capitals, the top companies will focus on using AI to "re-constructing production process", which means re-making all of business models via AI, said an industry insider.

Gaming is another field to be rapidly commercialized through AI. Currently, a lot of domestic game manufacturers are using AI to provide first drafts in a large number of pictures and copywriting, greatly reducing the workload in the early stage.

Digital economy and 5.5G

China has built the world's largest 5th generation mobile communication technology network in 2023. As digital infrastructures such as computing power centers, Internet Protocol Version 6, and Beidou Satellite Navigation System further improve, the data resources will provide an important engine for industries for intelligent, green and integrated transformation and upgrading.

In 2024, the 5.5G network equipment construction will be on the way. Huawei and big three telecom operators, namely, China Mobile, China Unicom, and China Telecom, are actively participating in trials and deployments, and a number of equipment suppliers plan to launch the 5.5G commercial devices in 2024.

Moreover, some local governments have released forward-looking polices in computing power, satellite internet, and industrial internet.

A salesman (left) introduces a residential project to potential homebuyers in Taiyuan, Shanxi Province, on July 14, 2023. WEI LIANG/CHINA NEWS SERVICE

Real estate

A meeting of the Political Bureau of the CPC Central Committee held in July 2023 noted that it is imperative to adjust and improve property policies in a timely manner and make use of the targeted policies in different cities, considering the fundamental change in the supply-demand situation in the real estate sector.

Another meeting held by the Ministry of Housing and Urban-Rural Development said two things will be the focus in 2024, namely stabilizing the real estate market and building a new development model for real estate.

The country should introduce further policies to stabilize the market and restore people's confidence, said Liu Yuan, vice-president of research institute at Centaline Property. Moreover, the government should give practical and specific arrangements to the real estate enterprises for financing.

The risks faced by housing developers will be controlled to a certain extent, and the supply-side impact on the market will significantly weaken in 2024, said Li Yujia, chief researcher at the Guangdong Planning Institute's residential policy research center.

Li said the capital chain tension of the developers will be eased, and the phenomenon of the developer selling assets at a discount price will be reduced, which will be conducive to the stability of asset prices in the entire market, and will greatly help boost confidence in the real estate market and reverse people's expectations.

Biotech industry

In 2023, the outbound transaction amount and trading volume of Chinese pharmaceutical companies grew rapidly, and the innovative drugs gradually occupied the dominant position in outbound projects. In 2024, the situation is expected to replicate and continue.

As the industry increased investments in research and development, domestic innovative drugs are expected to enter the quality improvement stage. Moreover, the cost of R&D is likely to stabilize, improving the quality of the R&D projects.

An industry insider said AstraZeneca buying China's Gracell Biotechnologies for $1.2 billion could be a turning point. Gracell will become the first Chinese biotech company to be acquired by a multinational pharmaceutical company.

For many biotech founders and investors, the mergers and acquisitions may become an important exit channel after the A-share IPO stage tightening.

People dine at a restaurant in Beijing, Jan 1, 2023. [Photo/Xinhua]

Food and beverage industry

The mass consumption is more rational than before, and the pursuit of extreme cost performance has become a common feature in 2023. Looking forward to 2024, the rational consumption and extreme cost-effective consumption will still be the mainstream, said industry insiders.

The cost reduction and efficiency improvement are becoming the industry consensus, and companies with strong supply chain control capabilities will have better performance in 2024.

China's catering consumption recovered rapidly in 2023, with the total scale expected to exceed 5 trillion yuan ($700.3 billion), surpassing the figure in 2019, according to an industry report jointly released by China Cuisine Association and Shuhai, a catering supply chain service enterprise.

Several securities brokerage research reports said the recovery trend of catering consumption is expected to be maintained in 2024, and the upstream, such as compound condiments, frozen foods, and pre-cooked dishes, are expected to continue to benefit.

Agriculture

Stabilizing the cultivated area and increasing the yield per unit will be an important guiding ideology to China's grain production in the next few years, said Han Yijun, director of the National Agriculture Research Center at China Agricultural University.

Meanwhile, the increasing yield per unit is a systematic project that includes high-quality seed, high-standard farmland, water conservancy facilities that can withstand floods and droughts, and modern agricultural machinery.

Non-ferrous metals

The macro-economic pressure led to a decline in the prosperity of the non-ferrous metals industry in 2023. With the macro-economic environment improving, market demand rising, and global monetary policies turning in 2024, the industry is expected to experience a process of weakening to strengthening.

The rapid development of industries such as AI computing power and humanoid robots will drive the demand of core metal materials.

Some companies expressed optimism to the precious metals sector that represented by gold in 2024, due to central banks have high willingness to allocate the gold in the future, and the hedging function of gold is also concerned by investors under the situation of global uncertainty increasing; in addition, the US Federal Reserve will start cutting interest rates in 2024, which is expected to catalyze gold price rising in the future.

Film and television industry

China's total box office earnings for 2023 exceeded 54.91 billion yuan and nearly 1.3 billion tickets were sold in the year.

The box office figure is lower than the record highs of over 60 billion yuan in 2019 and 2018, but close to the level of 2017, making it the fourth-highest annual box office in Chinese film history.

During the three-day New Year holiday, the country's box office kicked off 2024 with a record-high revenue of about 1.53 billion yuan, breaking the previous record of 1.3 billion yuan set during the same holiday in 2021, signaling a growth trend in Chinese film consumption.

The recovery has become a consensus in the film and television industry. In the past three years, many traditional film and television project teams have shifted to new tracks such as short videos and micro dramas; the film project industry chain with ten-million-level investment needs time to get back on track, said a person in charge of a film and television company in Hengdian, China's largest film and television production base in Zhejiang Province.

"Blockbuster" is the biggest expectation to the industry for recovery. The blockbuster movie is the key factor to promote China's total box office growth, and the high-quality content supply is the guarantee to increase the film and television consumption, said Feng Cuiting, a chief analyst in media at Cinda Securities.

The AI has given the industry new expectations for development. In the future, the generative AI is expected to promote the progress in the film and television industry chain, such as film and television scripts creation and evaluation, special effects production and video editing, as well as words turning video via large language model.

In the short term, there's still room for improvement in the production of full-process AI film and television works; currently, the AI is more suitable as a tool for reducing costs and increasing efficiency in the industry, said Feng.

The film and television works with more forms may create more "blockbusters" in 2024, some industry insiders said. Innovative contents and forms such as short dramas, interactive games, and extended reality will drive demand growth, and the AI will accelerate the demand growth, said Kong Rong, chief analyst at TF Securities.