Prime Highlights:
China’s GDP grew 5% in 2024, surpassing expectations but trailing 2023’s 5.2% growth.
Growth driven by strong manufacturing and exports, with weak domestic demand.
Deflation concerns linger, with low consumer confidence and modest retail sales growth.
Key Background:
China’s economy posted a 5% growth rate in 2024, surpassing economists’ predictions but reflecting underlying challenges in the country’s two-speed economy. Official data revealed that manufacturing and strong exports were the main contributors to the growth, as Chinese companies front-loaded exports in anticipation of potential higher tariffs from the United States. Additionally, Beijing’s stimulus measures, including monetary easing and infrastructure investments, helped bolster economic activity.
The National Bureau of Statistics (NBS) reported a 5.4% growth in the fourth quarter of 2024, marking a recovery from a slower third quarter. However, the full-year growth figure fell slightly short of 2023’s 5.2%, and remains the lowest since 1990, excluding pandemic-affected years. This highlights the dual nature of the Chinese economy, where robust export and manufacturing sectors are at odds with weak domestic consumer sentiment.
Despite positive growth in industrial output, which rose by 5.8%, consumer confidence remained subdued. Retail sales grew just 3.5%, and deflation concerns persist, with producer prices remaining negative for over two years. December saw a modest 0.1% increase in consumer prices, further signaling sluggish demand.
China’s demographic challenges are also evident, with the country’s population shrinking by nearly 1.4 million, marking the third consecutive year of decline. This is attributed to a higher death rate than birth rate, exacerbating long-term structural challenges.
Looking ahead, Beijing is expected to set its 2025 growth target at 5%, as analysts warn of persistent external risks, such as geopolitical tensions and escalating trade protectionism. The economy is also threatened by low consumer spending, with experts urging further stimulus to support household demand. Despite the growth figure exceeding expectations, concerns over China’s economic vulnerabilities and the credibility of official data continue to shape market sentiment. As trade challenges and internal pressures mount, the path to sustained recovery remains uncertain.
