BEIJING: China’s economy ended 2024 on better footing than expected helped by a flurry of stimulus measures, although the threat of a new trade war with the United States and weak domestic demand could hurt confidence in a broader recovery this year.
Exports, one of the few bright spots, could lose steam as United States President-elect Donald Trump, who has proposed hefty tariffs on Chinese goods, is set to return to the White House next week.
For the full-year 2024, the world’s second-largest economy grew 5.0%, data from the National Bureau of Statistics (NBS) data showed on Friday, meeting the government’s annual growth target of around 5%. Analysts had forecast 4.9% growth.
The economy grew 5.4% in the fourth quarter from a year earlier, significantly beating analysts’ expectations and marking the quickest since the second quarter of 2023.
Analysts polled by Reuters had forecast fourth-quarter gross domestic product (GDP) would expand 5.0% from a year earlier, quickening from the third-quarter’s 4.6% pace as a flurry of support measures began to kick in.
“China’s economy is showing signs of revival, led by industrial output and exports,” said Frederic Neumann, chief Asia economist at HSBC in Hong Kong.
However, he added, the strong GDP print last quarter may already have been flattered by front-loading of shipments to the US - something that will inevitably lead to a pay-back with production and exports turning down once tariffs begin to bite.
“As exports come under pressure in 2025, dragged lower by US import restrictions, there will be an even bigger need to apply domestic stimulus.”
Chinese stocks drew some support following the GDP data. Mainland Chinese blue chips rose 0.3% as of 0207 GMT, while Hong Kong’s Hang Seng added 0.14%.
The yuan was little changed against the dollar.
On a quarterly basis, GDP grew 1.6% in October-December, compared with a forecast 1.6% increase and a revised 1.3% gain in the previous quarter.
China’s economy has struggled for traction since a post-pandemic rebound quickly fizzled out, with a protracted property crisis, mounting local debt and weak consumer demand weighing heavily on activity.
Policymakers have pledged more stimulus this year, but analysts say the scope and size of China’s moves may depend on how quickly and aggressively Trump implements tariffs or other punitive measures.
But even as strong exports propelled the country’s trade surplus to a record high of $992 billion last year, the yuan currency has come under selling pressure. A dominant dollar, sliding Chinese bond yields and the threat of higher trade barriers have pushed the yuan to 16-month lows.
A slew of December economic readings on Friday suggested the economy gained traction heading into the new year, helped by a flurry of government support measures.
Even the property sector witnessed signs of recovery as new home prices steadied in December for the first time since June 2023, NBS data showed earlier on Friday. But for the full year, property investment fell 10.6% from the previous year, marking the largest annual decline on record.
Industrial output grew 6.2% from a year earlier in December, quickening from November’s 5.4% pace and beating expectations for a 5.4% increase in a Reuters poll. It marked the fastest growth since April last year.
Retail sales, a gauge of consumption, rose 3.7% last month, accelerating from the 3.0% pace in November as consumers started to prepare for the eight day-long Lunar New Year holidays in January.
“It (will) require large and persistent policy stimulus to boost economic momentum and sustain the recovery. To contain the rising unemployment rate the fiscal policy stance needs to become more proactive,” Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.
As businesses remained wary of adding workers before the festival and with concerns over possible trade disputes with the US, the nationwide survey-based jobless rate climbed to 5.1% in December from November’s 5.0%.
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