Railway builders erect a box girder at the standard project site in front of the Huning section of the Shanghai-Nanjing-Hefei high-speed railway in Suzhou, Jiangsu province, China, on January 10, 2025.Â
Costfoto | Nurfoto | Getty Images
China’s economy expanded 5.4% in the fourth quarter, beating market expectations, as a raft of stimulus measures boosted GDP growth and allowed Beijing to meet its annual target.
According to China’s National Bureau of Statistics, this last-quarter sprint helped lift China’s full-year GDP growth to 5.0% in 2024, in line with the official target of “around 5%.”
The fourth-quarter recovery beat estimates of economists polled by Reuters for a 5% increase, while it outpaced the 4.6% in the third quarter, 4.7% in the second quarter, 5.3% in the first quarter.
“The change in policy stance in September last year helped the economy stabilize in the fourth quarter, but it requires a large and sustained policy stimulus to boost economic momentum and support the recovery,” said Zhiwei Zhang, president and chief economist, Pinpoint Asset Management. a note.
The statistics bureau warned, “we must be aware that the negative effects brought about by the external environment are increasing, internal demands are insufficient.” He called for the implementation of “more proactive and effective macro policies”.
Last year’s growth was slower compared to 5.4% growth in 2023, after the pandemic. As part of an annual revision of preliminary figures, the statistics bureau in late December revised 2023 GDP growth to 7.4%, according to a CNBC calculation of official data.
In December, retail sales rose 3.7% from a year earlier, beating the Reuters forecast of 3.5%. Industrial production expanded 6.2% from a year earlier, against expectations of 5.4%, underscoring China’s imbalance between domestic output and weak demand.
Full-year fixed-asset investment rose 3.2% in 2024, compared with a 3.3% rise forecast in a Reuters poll, as the drag on real estate investment widened to a 10.6% decline, compared with with the period January-November.
The urban unemployment rate rose to 5.1% in December from 5.0% in the previous month.
The disposable income of urban residents grew by 4.4%, slower than overall economic growth, while that of rural residents grew by 6.3% in 2024.
Stimulus promotion
China has been trying to boost economic growth and has taken several measures to that end.
Since late September, Chinese authorities have called for a halt to the real estate slump, cut interest rates and announced a five-year fiscal package worth 10 trillion yuan ($1.4 trillion) to ease local government funding crunches. . Beijing has also expanded a program for consumers to trade in used cars and home appliances and buy new ones at a discount.
“They are betting on a substantial infusion of policy stimulus and reforms to turbocharge the country’s economy in 2025, boosting domestic demand and avoiding the disinflationary loom,” said Bruce Pang, distinguished senior fellow at the National Institute for Finance and Development.
Top leaders have promised “proactive” fiscal measures and a “moderately loose” monetary policy stance for the current year.
Some analysts expect the stimulus could begin to take effect this year, but it will take longer to see a significant impact.
The slump in real estate and uncertainty about future incomes have weighed on consumer spending and business confidence, adding to concerns about deflation.
Consumer inflation in China remained barely above zero, while wholesale prices fell for a 27th straight month in December, official data showed last week.
The government is expected to unveil official growth targets for 2025 and additional stimulus measures at annual parliamentary meetings in March.
Economists predict that China will maintain its GDP growth target for 2025 at around 5%, if not slightly lower.
Friday’s data comes just days before Donald Trump is inaugurated as the next US president on January 20. Trump has said that immediately after taking office, he plans to impose additional tariffs of at least 10% on Chinese goods. He has also appointed several China hawks to key cabinet posts.
The statistics bureau reported on Friday that the national population fell by 1.39 million from 2023, to 1.408 billion people in 2024. The absolute decline in 2023 from the previous year was 2.08 million people, according to the statistics bureau.
