China’s economy expanded at a 5% annual rate in 2024, meeting Beijing’s target of “around 5%” growth despite a slowdown from the previous year. This growth was driven by robust exports and a series of stimulus measures implemented by the government.
For the fourth quarter, China’s economy grew by 5.4%, the National Bureau of Statistics reported on Friday. Exports surged as companies and consumers accelerated purchases in anticipation of potential tariff hikes from incoming President-elect Donald Trump.
The report highlighted that the national economy remained generally stable, with notable progress in high-quality development. The government’s timely implementation of a package of policies played a significant role in boosting public confidence and aiding the economic recovery.
Manufacturing proved to be a key growth driver in 2024, with industrial output increasing by 5.8% year-over-year. Retail sales of consumer goods grew by 3.5%, while exports expanded by 7.1%, and imports rose by 2.3%.
Despite these positive figures, China’s economy continues to face challenges, particularly weak domestic demand and deflationary pressures, as its post-pandemic recovery has faltered. The property sector, once a major engine of growth, has also experienced a downturn, adding to the economic strain.
While China’s economy grew by 5.2% in 2023, economists expect further deceleration in the coming years. Some experts, however, question the accuracy of official growth figures. Eswar Prasad, an economics professor at Cornell University, expressed skepticism, noting that many economic indicators and financial markets are signaling deeper issues.
Prasad highlighted the ongoing combination of weak domestic demand, persistent deflationary pressures, and a challenging external environment, particularly the threat of heightened tariffs from the US under Trump’s administration. This week, the Biden administration also imposed additional restrictions on the export of advanced semiconductors and technologies, further straining trade relations.
To counter these challenges, the Chinese government has rolled out a range of stimulus measures, including reducing banks’ reserve requirements, cutting interest rates, and frontloading billions of dollars for construction projects in 2025. The government has also directed banks to extend loans to struggling property developers, who are burdened by massive debts following a crackdown on excessive borrowing.
In addition to these measures, Beijing has expanded a trade-in scheme for consumer goods and increased wages for millions of government workers in an effort to stimulate domestic demand.
However, some economists argue that these incremental steps must be accompanied by deeper structural reforms to ensure sustainable growth. These reforms, they say, should focus on enhancing productivity and reducing China’s reliance on construction and export manufacturing. Private businesses remain cautious about expanding investments or hiring, given the policy uncertainties of recent years.
Prasad emphasized that China needs a comprehensive policy package to revitalize growth, including targeted monetary and fiscal stimulus, alongside structural reforms to boost private sector confidence.
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