China's economy grew at an annual rate of 5% in 2024, meeting Beijing's "around 5%" growth target, though slower than the previous year.
This performance was driven by robust exports and recent stimulus measures, reports AP.
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The government reported Friday that the economy accelerated in the fourth quarter, with a 5.4% growth rate from October to December. Export activity surged as businesses and consumers sought to preempt potential tariff increases by U.S. President-elect Donald Trump on Chinese goods.
“The national economy was generally stable, with steady progress and notable achievements in high-quality development,” the National Bureau of Statistics (NBS) stated. The report credited timely implementation of policy measures for boosting public confidence and facilitating a significant economic recovery.
Manufacturing played a key role in the growth, with industrial output rising 5.8% year-on-year. Retail sales of consumer goods increased by 3.5% annually, while exports grew 7.1% and imports rose 2.3%.
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Despite these gains, China's economy faces challenges, including weaker consumer spending, deflationary pressures, and a struggling property sector, historically a major growth driver. The economy grew at 5.2% in 2023, and experts anticipate a further slowdown in coming years.
According to Zichun Huang of Capital Economics, recent policy easing helped the economy regain momentum in the last quarter of 2024. Huang noted, “Increased fiscal spending should continue to support activity in the near term, though growth is likely to slow in 2025 due to potential U.S. tariff hikes and structural imbalances.”
China’s aging and declining population adds to its economic pressures. The population dropped for the third consecutive year in 2024, reaching 1.408 billion—a decline of 1.39 million from the previous year. Rising living costs, coupled with stagnant wages, have led many young Chinese to delay or forgo marriage and parenthood, exacerbating demographic challenges.
Some analysts question the accuracy of China’s official growth figures. Cornell University economist Eswar Prasad remarked, “The official growth target’s exact achievement is doubtful, given widespread indicators of weak economic activity and financial stress.” He cited low domestic demand, deflationary pressures, and an unfavourable global environment as major hurdles.
President-elect Trump has pledged to increase U.S. tariffs on Chinese imports, while the outgoing Biden administration recently tightened restrictions on exports of advanced semiconductors and technologies to China, aiming to maintain the U.S. lead in innovation.
In response, China’s government has introduced various stimulus measures, including reducing bank reserve requirements, lowering interest rates, and advancing budget allocations for infrastructure projects. Authorities have also instructed banks to support indebted property developers.
Fu Linghui, NBS spokesperson, emphasised the importance of boosting consumption and domestic demand in 2025. “With coordinated efforts between existing and incremental policies, economic recovery momentum is building, consumer demand recovery has accelerated, and favourable conditions for moderate price rebounds are increasing,” Fu said.
To revive domestic demand, Beijing has expanded a trade-in programme for consumer goods and raised salaries for millions of government employees. However, economists stress the need for broader structural reforms to enhance productivity and reduce reliance on construction and export manufacturing.
Concerns persist about private sector confidence, which has been shaken by years of unpredictable policy changes. Additionally, weak social safety nets, declining housing prices, and subdued stock market performance have dampened household spending.
“China needs a comprehensive and well-coordinated policy package to revitalise growth,” Prasad advised. Such measures should combine substantial monetary and fiscal stimulus with reforms to rebuild private sector confidence and support long-term economic sustainability.