China’s economy ended 2024 on a stronger-than-expected note, supported by a flurry of stimulus measures, although challenges from potential new U.S. trade tariffs and weak domestic demand could hinder broader recovery efforts this year.
For the full year, China’s economy expanded by 5.0%, in line with the government’s annual growth target. Analysts had forecast a slightly lower growth rate of 4.9%. The fourth quarter saw even more robust performance, with the economy growing 5.4% compared to the same period last year, surpassing analysts’ expectations and marking the fastest growth since the second quarter of 2023.
Following the release of the data, China’s Shanghai stock market rose 0.3%, while the blue-chip CSI 300 index gained 0.4%. The yuan remained stable against the U.S. dollar.
Expert Commentary:
Alex Loo, FX and Macro Strategist at TD Securities in Singapore, warned that while the economy has benefited from recent stimulus efforts, the underlying foundation remains weak. He speculated that more fiscal funds will be deployed during the March 5 budget announcement to cushion the economy against the potential impacts of U.S. policies under President-elect Donald Trump. Loo expects China’s GDP growth to slow to 4.8% in 2025, with the government likely setting a target around 5%.
Andy Ji, Asian FX & Rates Analyst at ITC Markets in Shanghai, noted a mixed bag of economic data, pointing out that retail sales and investment growth—at 3.5% and 3.2%, respectively—were significantly below overall GDP growth. He emphasized that the looming shift in U.S. trade policy would make the 2025 growth target a key focus for analysts, adding that inflation targets in 2024 were missed due to weak consumer spending.
Ben Bennett, Asia-Pacific Investment Strategist at Legal & General Investment Management in Hong Kong, acknowledged the positive shift in China’s economic policies but cautioned that the property sector remains under pressure. He suggested that authorities are keen to avoid a return to the days of excessive leverage and soaring property prices.
Zhiwei Zhang, Chief Economist at Pinpoint Asset Management in Hong Kong, commented on the mixed signals in the macro data, pointing out that while GDP growth exceeded expectations, the rising unemployment rate, now above 5%, highlights the need for persistent policy stimulus to sustain economic momentum.
Zhaopeng Xing, Senior China Strategist at ANZ in Shanghai, observed that while Q4 GDP growth was impressive, industrial production’s strength stemmed largely from external demand, particularly from front-loaded exports. He anticipated that China would likely adjust its policy stance to mitigate the effects of U.S. tariffs, potentially easing liquidity ahead of the Lunar New Year.
Woei Chen Ho, Economist at UOB in Singapore, highlighted that the industrial sector’s growth in December was likely driven by the anticipation of U.S. tariffs under the incoming Trump administration. He noted that the outlook for 2025 remains weak, with retail sales, which reflect consumer sentiment, remaining a key focus.
Charu Chanana, Chief Investment Strategist at Saxo in Singapore, expressed cautious optimism for Chinese assets, acknowledging that the 2024 stimulus measures have had a positive impact. However, she emphasized that long-term returns will depend on how China navigates structural challenges and trade risks, particularly as it faces potential tariffs from the U.S.
In summary, while China’s economy showed resilience in 2024, bolstered by government intervention, the outlook for 2025 is uncertain, with potential trade disruptions and domestic weakness continuing to cloud prospects for sustained growth.
Related topics:
Chipotle Doubles Investment in Cultivate Next Fund to $100M to Fuel Sustainability and Innovation
GE Vernova (GEV) Shares Rise Following Price Target Increase by Bank of America
