China’s economy closed 2024 on a more optimistic note than anticipated, supported by a range of stimulus measures. However, challenges such as the possibility of a new trade war with the United States and continued sluggish domestic demand could dampen hopes for a sustained recovery this year.
According to data from the National Bureau of Statistics released on Friday, China’s GDP grew 5.0% in 2024, meeting the government’s annual target of around 5% and slightly surpassing analysts’ expectations of 4.9% growth.
The fourth quarter saw particularly strong performance, with the economy expanding by 5.4% compared to the same period a year earlier, outpacing expectations and marking the fastest growth since the second quarter of 2023. Analysts had predicted a 5.0% increase, expecting a pickup from the third quarter’s 4.6% growth as government support measures began to take effect.
On a quarterly basis, the economy grew 1.6% from October to December, matching forecasts and surpassing the previous quarter’s revised 1.3% increase.
Despite this positive momentum, China’s recovery has been hindered by lingering issues such as a prolonged property crisis, rising local debt, and subdued consumer demand. Exports, which have been a key growth driver, may face challenges in the near future, especially with the looming return of President-elect Donald Trump to the White House, whose proposed tariffs on Chinese goods have raised concerns.
While Chinese policymakers have committed to further stimulus in 2025, the extent and timing of these measures could depend heavily on how aggressively Trump pursues tariffs or other trade restrictions.
Even though exports helped push China’s trade surplus to a record high of $992 billion in 2024, the yuan has come under pressure. The strength of the US dollar, falling Chinese bond yields, and the threat of increased trade barriers have all contributed to the yuan’s decline to a 16-month low.
Looking ahead, a series of December economic reports pointed to improving conditions toward the end of the year, bolstered by government initiatives. Industrial output grew by 6.2% year-over-year in December, a strong acceleration from November’s 5.4% and beating analysts’ expectations of a 5.4% rise. It marked the fastest growth since April 2024.
Retail sales, a key indicator of consumer spending, rose 3.7% in December, up from 3.0% in November, as consumers began preparing for the Lunar New Year celebrations in January.
However, despite some improvement, businesses remain cautious about expanding their workforce, especially in light of ongoing trade tensions with the US. As a result, the unemployment rate ticked up slightly, rising to 5.1% in December from 5.0% in November, according to a nationwide survey.
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