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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, mentioned the Nationwide Bureau of Statistics, rising 5.4 per cent yr on yr and rebounding from slower progress within the third quarter.
“With a bundle of incremental [stimulus] insurance policies . . . confidence was successfully bolstered and the economic system recovered remarkably,” the NBS mentioned 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, through which robust exports and manufacturing are offsetting weak family sentiment.
In September, the central financial institution introduced financial easing and assist for the inventory market. Beijing has additionally launched a programme to refinance native authorities debt and velocity up stimulus spending focusing 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 shopper costs managed progress of simply 0.1 per cent in December.
NBS director Kang Yi instructed a press convention that 2024 might be “described as extremely turbulent, marked by intensified geopolitical conflicts and escalating commerce 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 predicted to face challenges given incoming US president Donald Trump’s threats of upper tariffs.
“The antagonistic results of the exterior surroundings are deepening. Domestically, inadequate demand persists,” mentioned Kang, including that “employment and revenue progress” had been below strain.
Retail gross sales grew 3.5 per cent final yr as shopper confidence remained weak amid a chronic housing downturn, whereas industrial output rose 5.8 per cent due to 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 virtually 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”, mentioned Frederic Neumann, chief Asia economist at HSBC.
“The surge in progress was actually pushed by industrial manufacturing, which hints on the assist from frontal loading of exports in anticipation of US import restrictions,” mentioned Neumann. “That may inevitably result in a payback as US import restrictions start to chew.”
China’s commerce surplus with the remainder of the world reached a file of virtually $1tn in 2024, customs figures confirmed final week, due to robust export progress as Chinese language producers stoked output to make up for sluggish home demand. Import progress has remained extra modest.
“The present Achilles heel within the Chinese language economic system is admittedly the hesitant shopper,” Neumann added. “All this factors to the necessity for extra stimulus, significantly the necessity to assist shopper spending energy.”
The discharge additionally underlined doubts about China’s official knowledge, which some analysts more and more fear doesn’t replicate underlying weak point within the economic system.
“The Chinese language authorities’s ostensible attainment of its progress goal is a Pyrrhic victory that additional erodes credibility in official knowledge and, at finest, displays an economic system nonetheless beset by underlying fragilities and lack of confidence in authorities policymaking,” mentioned Eswar Prasad, professor at Cornell College and senior fellow on the Brookings Establishment.
Analysts at Morgan Stanley mentioned the higher than anticipated progress within the fourth quarter “might be shortlived”, and will soften from the second quarter on account of export front-loading and inadequate stimulus measures.
“We expect higher knowledge has probably diminished Beijing’s sense of urgency, and coverage could proceed to undershoot on the housing and social welfare entrance,” they wrote in a be aware.
China’s CSI 300 index of mainland-listed blue-chip firms rose 0.5 per cent in morning buying and selling following the info launch, after opening decrease earlier within the day.
The benchmark remains to be down about 14 per cent from its October 8 peak, when stimulus coverage bulletins stoked a inventory rally.
