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China’s economic system grew 5 per cent final yr on the again of surging manufacturing, official knowledge confirmed, as firms front-loaded exports in anticipation of upper US tariffs and as Beijing stepped up stimulus efforts.
The economic system “recovered remarkably” within the fourth quarter of 2024, stated the Nationwide Bureau of Statistics, rising 5.4 per cent yr on yr and rebounding from slower progress within the third quarter.
“With a package of incremental [stimulus] policies . . . confidence was effectively bolstered and the economy recovered remarkably,” the NBS stated in its 2024 GDP knowledge launch on Friday.
The annual determine, which barely exceeded economists’ forecasts of 4.9 per cent, trailed final yr’s progress of 5.2 per cent and was the bottom since 1990, excluding years distorted by the coronavirus pandemic.
The information comes as Beijing is attempting to revive robust progress in a two-speed economic system, wherein robust exports and manufacturing are offsetting weak family sentiment.
In September, the central financial institution introduced financial easing and help for the inventory market. Beijing has additionally launched a programme to refinance native authorities debt and velocity up stimulus spending concentrating on infrastructure and different areas.
However economists fear that China is prone to entrenched deflation. Producer costs have been in adverse territory for greater than two years, and client costs managed progress of simply 0.1 per cent in December.
NBS director Kang Yi advised a press convention that 2024 could possibly be “described as highly turbulent, marked by intensified geopolitical conflicts and escalating trade protectionism”.
Analysts count on Beijing to set its official progress goal for 2025 at about 5 per cent for the third yr in a row when its rubber-stamp parliament meets in March, although commerce is anticipated to face challenges given incoming US president Donald Trump’s threats of upper tariffs.
“The adverse effects of the external environment are deepening. Domestically, insufficient demand persists,” stated Kang, including that “employment and income growth” have been beneath stress.
Retail gross sales grew 3.5 per cent final yr as client confidence remained weak amid a chronic housing downturn, whereas industrial output rose 5.8 per cent because of robust progress in manufacturing.
Residential property costs slid throughout China’s largest cities, however new house costs rose in Shanghai.
In one other signal of the nation’s long-term structural challenges, China’s inhabitants shrank by nearly 1.4mn in 2024, the third consecutive yr of decline, as a slight rise in births from the earlier yr to 9.54mn was outstripped by 10.93mn deaths.
Whereas China’s financial progress beat expectations, the headline determine “masks some underlying vulnerabilities”, stated Frederic Neumann, chief Asia economist at HSBC.
“The surge in growth was really driven by industrial production, which hints at the support from frontal loading of exports in anticipation of US import restrictions,” stated Neumann. “That will inevitably lead to a payback as US import restrictions begin to bite.”
China’s commerce surplus with the remainder of the world reached a report of just about $1tn in 2024, customs figures confirmed final week, because of robust export progress as Chinese language producers stoked output to make up for sluggish home demand. Import progress has remained extra modest.
“The current Achilles heel in the Chinese economy is really the hesitant consumer,” Neumann added. “All this points to the need for more stimulus, particularly the need to support consumer spending power.”
The discharge additionally underlined doubts about China’s official knowledge, which some analysts more and more fear doesn’t mirror underlying weak point within the economic system.
“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,” stated Eswar Prasad, professor at Cornell College and senior fellow on the Brookings Establishment.
Analysts at Morgan Stanley stated the higher than anticipated progress within the fourth quarter “could be shortlived”, and will soften from the second quarter because of export front-loading and inadequate 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 word.
China’s CSI 300 index of mainland-listed blue-chip firms rose 0.5 per cent in morning buying and selling following the information launch, after opening decrease earlier within the day.
The benchmark continues to be down about 14 per cent from its October 8 peak, when stimulus coverage bulletins stoked a inventory rally.
Extra reporting by William Sandlund and Haohsiang Ko in Hong Kong, William Langley in Guangzhou and Wenjie Ding in Beijing
