China’s GDP growth hits 5% target in 2024

China’s economy grew by 5% in 2024, driven by a surge in the manufacturing sector. Companies accelerated exports in anticipation of US tariff increases, and Beijing implemented stimulus measures to bolster growth, according to official data.

The economy “recovered remarkably” in the fourth quarter of 2024, expanding by 5.4% year-on-year, a rebound from slower growth in the third quarter, the National Bureau of Statistics (NBS) reported.

“Confidence was effectively supported by an increasing package of [stimulus] policies, and the economy recovered remarkably,” the NBS stated in its 2024 GDP data release on Friday.

The annual growth figure slightly exceeded economists’ forecasts of 4.9% but fell short of the 5.2% growth recorded in 2023. This marks the lowest growth rate since 1990, excluding years impacted by the COVID-19 pandemic.

The data comes as Beijing aims to revive robust growth in a two-speed economy, where strong exports and manufacturing offset weak household sentiment.

In September, the central bank announced monetary easing measures and support for the stock market. Beijing also launched a program to refinance local government debt and accelerate stimulus spending targeting infrastructure and other sectors.

However, economists warn that China faces the risk of entrenched deflation. Producer prices have remained in negative territory for over two years, and consumer prices grew by just 0.1% in December.

NBS Director Kang Yi noted at a press conference that 2024 “can be described as a rather turbulent period in which geopolitical conflicts intensified and trade protectionism increased.”

Analysts expect Beijing to set its official growth target for 2025 at around 5% for the third consecutive year when the National People’s Assembly convenes in March. Trade is anticipated to face challenges due to the threat of higher tariffs under the new US administration led by President Donald Trump.

“The negative effects of the external environment are deepening. Domestically, demand remains lackluster,” Kang said, adding that “employment and income growth” are under pressure.

Retail sales grew by 3.5% in 2024, reflecting weak consumer confidence amid the ongoing housing crisis. Meanwhile, industrial production rose by 5.8%, driven by strong growth in the manufacturing sector.

Population decline continues for the third year

While house prices fell in China’s largest cities, new home prices rose in Shanghai.

In a further sign of long-term structural challenges, China’s population declined by nearly 1.4 million in 2024, marking the third consecutive year of decline. Births increased to 9.54 million but lagged behind 10.93 million deaths.

Frederic Neumann, HSBC’s chief Asia economist, noted that while China’s economic growth exceeded expectations, the headline figure “masked some underlying vulnerabilities.”

“The pick-up in growth was indeed driven by industrial production, which points to support from front-loading of exports in anticipation of US import restrictions,” Neumann told the Financial Times. “This will inevitably lead to a payback when the US import restrictions start to take effect.”

According to customs data released last week, China’s trade surplus with the rest of the world reached a record high of nearly $1 trillion in 2024, fueled by strong export growth as Chinese manufacturers ramped up production to offset sluggish domestic demand. Import growth remained modest.

“The current Achilles’ heel in the Chinese economy is indeed the hesitant consumer,” Neumann added. “All this points to the need for more stimulus, especially the need to support consumer spending power.”