China’s economy expanded by 5% in 2024, buoyed by surging manufacturing and government stimulus, according to official data released by the National Bureau of Statistics (NBS).
The figure slightly exceeded economists’ forecasts of 4.9% but marked the country’s slowest growth rate since 1990, excluding years affected by the coronavirus pandemic.
The rebound in the fourth quarter was particularly notable, with the economy growing 5.4% year-on-year after a sluggish third quarter.
This recovery was attributed to a suite of incremental stimulus policies designed to stabilize growth in a year marked by geopolitical tensions and sluggish domestic demand.
In its 2024 GDP data release on Friday, the NBS said,
With a package of incremental [stimulus] policies . . . confidence was effectively bolstered and the economy recovered remarkably.
However, despite the headline number exceeding expectations, analysts warn that the country’s reliance on manufacturing and exports masks deeper structural vulnerabilities.
Manufacturing surge offsets weak consumer demand
The industrial sector led the economic revival, with output rising 5.8% in 2024.
Manufacturers ramped up production to front-load exports in anticipation of stricter US tariffs under President Donald Trump’s administration, contributing to a record trade surplus of nearly $1 trillion.
However, weak domestic demand underscored ongoing challenges.
Retail sales, a key indicator of consumer confidence, grew by just 3.5% over the year, reflecting muted household sentiment amid a protracted housing slump and subdued income growth.
“The current Achilles’ heel in the Chinese economy is really the hesitant consumer,” said Frederic Neumann, chief Asia economist at HSBC in a report by Financial Times.
All this points to the need for more stimulus, particularly the need to support consumer spending power.
Property markets also reflected mixed signals. New home prices rose in Shanghai, but residential property values in other major cities declined, exacerbating concerns over household wealth and confidence.
Stimulus props up growth, but doubts linger
Throughout the year, Beijing rolled out measures to shore up economic activity.
These included monetary easing by the central bank, support for the stock market, and refinancing programs to reduce local government debt.
Infrastructure-focused spending also played a pivotal role in bolstering industrial production.
Yet, economists are skeptical about the sustainability of growth driven largely by external demand and state intervention.
The structural weaknesses in the economy, including deflationary pressures and demographic decline, remain unaddressed.
Source: Financial Times
Producer prices have remained in negative territory for more than two years, and consumer prices grew by a mere 0.1% in December, sparking fears of entrenched deflation.
Morgan Stanley analysts cautioned that the better-than-expected fourth-quarter performance might not last and could soften from the second quarter due to export front-loading and insufficient stimulus measures.
We think better data has likely reduced Beijing’s sense of urgency, and policy may continue to undershoot on the housing and social welfare front,” they wrote in a note.
China’s population decline deepens long-term concerns
Adding to Beijing’s challenges is the country’s shrinking population.
For the third consecutive year, the population declined, shrinking by nearly 1.4 million in 2024.
While births edged higher to 9.54 million, they were outpaced by 10.93 million deaths.
The demographic shift poses significant economic risks, including a shrinking labor force and increased pressure on social welfare systems.
Economists say this trend underscores the urgency for long-term reforms that address income growth, retirement security, and support for families.
Is China’s growth data reliable?
Despite the NBS’s optimism, some analysts question the credibility of China’s official growth figures, which they argue may downplay the economy’s underlying weaknesses.
Eswar Prasad, professor at Cornell University and senior fellow at the Brookings Institution, said,
The Chinese government’s ostensible attainment of its growth target is a Pyrrhic victory that further erodes credibility in official data and, at best, reflects an economy still beset by underlying fragilities and loss of confidence in government policymaking.
Such skepticism is echoed by global investors.
While the CSI 300 index of mainland-listed blue-chip companies rose 0.5% following the data release, it remains down 14% from its October peak, highlighting lingering concerns about policy effectiveness.
China’s economy in 2025: cautious optimism
Beijing is expected to set a growth target of around 5% for 2025, maintaining the cautious tone adopted in recent years.
However, achieving this goal could prove challenging as the external environment becomes more hostile.
Donald Trump’s return to the White House has raised the specter of intensified trade restrictions, a factor that could weigh heavily on China’s export-driven growth model.
At the same time, domestic demand remains fragile, with retail and housing markets showing no signs of a significant turnaround.
“The adverse effects of the external environment are deepening. Domestically, insufficient demand persists,” said Kang, adding that “employment and income growth” were under pressure.
Economists are urging Beijing to pivot from its reliance on state-driven industrial activity to a model that prioritizes household consumption.
Whether such reforms will materialize remains uncertain.
China’s economic performance in 2024 highlights both its resilience and its vulnerabilities.
While manufacturing and exports have carried the economy through turbulent times, the road ahead will demand more comprehensive and inclusive strategies to ensure sustainable growth.
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