In data published days before the inauguration of US President-elect Donald Trump – who is threatening a trade war – China recorded economic growth of 5% in 2024, which is the slowest pace in 3 decades excluding the “Covid-19” period.
Beijing has set a target of achieving growth of about 5% after 5.2% in its gross domestic product recorded in 2023, with the continuing real estate sector crisis, slowdown in domestic consumption, and trade tensions with the United States and the European Union.
In the year 2024, China’s gross domestic product reached 134.9 trillion yuan (about 18.4 billion dollars), according to official estimates published today, Friday, by the National Bureau of Statistics.
Retail sales – a key measure of consumer sentiment – rose by 3.5%, a rate much lower than the 7.2% recorded in 2023, while industrial output increased by 5.8% in 2024 compared to 4.6% the previous year.
Despite achieving its growth goals, Beijing acknowledged today that the Chinese economy still faces “difficulties and challenges.”
The National Bureau of Statistics – a government body – said: “Negative influences from the external environment are increasing, domestic demand is insufficient, some companies are experiencing difficulties in production and operation, and the economy is still facing difficulties and challenges.”
China achieved its target growth of 5% thanks to exports and stimulus efforts.
The pace of exports has accelerated as companies and consumers rush to weather potential tariff increases that Donald Trump may impose on Chinese goods.
In recent years, the world’s second largest economy has faced increasingly intense trade and geopolitical tensions with the United States.
What about the future?
Analysts polled by Agence France-Presse estimated that growth would fall to 4.4% in 2025, and even below 4% the following year, as China has not yet recovered from the consequences of the pandemic, domestic spending is still in recession and local governments are burdened with debt, all of which are factors that continue to affect the economy. Pressure to grow.
Despite this, the 5.4% increase in economic growth recorded during the last four months far exceeded expectations of 5% in the Bloomberg survey, and was much better than the same period in 2023.
The data sends us “mixed messages,” said Qiu Zhang, president of Pinpoint Asset Management, adding that Beijing’s recent policy shift “helped the economy stabilize in (the fourth quarter), but it requires significant and sustained policy stimulus to enhance economic momentum and sustain the recovery.”
For his part, Zichun Huang, a Chinese economist at Capital Economics, said that she expects “growth to continue to accelerate in the coming months.”
She added, “The government’s measures to support the real estate sector appear to provide some relief as the pace of decline in housing prices slows and some recovery in new housing sales is recorded.”
Motivational measures
However, analysts warn that more efforts are needed to stimulate domestic consumption, given the uncertainty over the prospects for Chinese exports.
China plans to record similar growth in 2025 through more stimulus measures to counter the impact of an expected increase in US customs duties.
China’s central bank has hinted that it will cut interest rates further in 2025 as part of a major shift characterized by a “fairly flexible” stance on monetary policy.
Harry Murphy Cruz of Moody’s Analytics said that “monetary policy support alone is unlikely to correct the economy,” and wrote, “China is suffering from a crisis of confidence, not a credit crunch.”
For his part, Ting Lu, chief China economist at Nomura, said that Beijing – which was “encouraged” by achieving last year’s target – is unlikely to change its annual growth target of about 5% for next year.
“We are concerned that Beijing may not step up enough to do the diligent work expected of it after recording short-term success,” Lu wrote.
He believed that despite the optimistic statements published today, Friday, the time is not appropriate for Beijing to rest on its laurels.
