China’s economy grew 5.4% in the fourth quarter of 2023, beating market expectations and meeting the government’s target for 2024 growth. However, the unbalanced growth has raised concerns that structural problems may deepen further in 2025.
Industrial output far outpaced retail sales, highlighting the supply-side strength of China’s economy, which runs a trillion-dollar trade surplus. However, this growth is partly underpinned by factory gate deflation, making Chinese goods competitive on global markets but also exposing Beijing to greater conflicts as trade gaps with rival countries widen.
The export-led growth has led to falling prices, ripping into corporate profits and workers’ incomes. Many people are feeling the pinch, with workers facing uncertainties and facing job cuts. The government’s pledge to prioritize domestic consumption in this year’s policies has been met with skepticism, with analysts warning that a trade war 2.0 could find China in a more vulnerable position.
The world’s second-largest economy beat economists’ forecast of 4.9% growth, but the last-minute bounce in growth may have been flattered by front-loading of shipments to the U.S. ahead of any new tariffs. Analysts warn that there will be an even bigger need to apply domestic stimulus this year, and that long-standing scepticism about the accuracy of official data has shifted into higher gear.
China’s GDP expanded 5.0% in 2024, meeting the government’s target, but the country’s outlook is clouded by trade tensions, including the potential impact of Donald Trump’s return to office. The uncertainty is reflected in the subdued markets and wavering confidence in China’s outlook.
Source: https://www.reuters.com/world/china/chinas-economic-growth-surpasses-forecasts-stimulus-push-2025-01-17