Railway builders build a box girder at the site of the standard project in front of the Huning section of the Shanghai-Nanjing-Hefei high-speed railway in Suzhou, Jiangsu province, China, January 10, 2025.
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China's economic activity accelerated more than expected in the final three months of 2024 as stimulus measures kicked in, helping Beijing meet its annual growth target.
China's gross domestic product grew 5.4% in the fourth quarter, topping Reuters polled estimates of 5.0% growth and topping the 4.6% in the third quarter, 4.7% in the second quarter and 5.3% in the first quarter.
That final quarter sprint helped boost China's full-year GDP growth to 5.0% in 2024, China's statistics bureau said on Friday, in line with the official target of “around 5%.”
“The policy shift in September last year helped the economy stabilize in the fourth quarter, but large and sustained policy stimulus is needed to boost economic momentum and sustain the recovery,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management a note.
The statistics office warned in its statement that “the negative impact of the external environment is increasing, but domestic demand is insufficient.” It called for the implementation of “more proactive and effective macro policies.”
Mainland China's blue-chip CSI 300 index reversed course following the positive data, rising 0.15%. China's offshore yuan rose slightly to 7.3398 per U.S. dollar, while the benchmark 10-year Treasury yield fell 2 basis points to 1.638, according to LSEG data.
Growth last year was slower than the 5.4% increase in 2023 after the pandemic. As part of an annual revision of preliminary figures, the statistics agency revised GDP growth for 2023 to 7.4% in late December, 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 rose 6.2% year-on-year, compared with expectations of 5.4%, underscoring China's imbalance between domestic production and weak demand.
Full-year fixed investment rose 3.2% in 2024, falling short of the 3.3% increase forecast in a Reuters poll, as resistance in property investment eased to a decline compared to the January-November period 10.6% tightened.
The urban unemployment rate rose to 5.1% in December from 5.0% in the previous month.
The disposable income of urban residents increased by 4.4%, slower than overall economic growth, while that of rural residents increased by 6.3% in 2024.
Growth, demographic concerns
Statistics bureau spokesman Fu Linghui told reporters on Friday that consumers' purchasing ability was still weak and pointed out that the unfavorable impact of external factors may intensify in 2025, according to CNBC's Mandarin translation of his remarks .
He reiterated that Beijing's priority this year is to boost consumption and that the CPI could “rise moderately” in 2025.
Consumer inflation in China remained just above zero while wholesale prices fell for a 27th straight month in December, official data showed last week.
Friday's data comes just days before Donald Trump is inaugurated as the next US president on January 20. Trump has said he plans to impose additional tariffs of at least 10% on Chinese goods shortly after taking office. He has also appointed some China hawks to key cabinet positions.
Growth momentum, driven by a surge in exports, could continue into the first quarter of this year, said Erica Tay, director of macro research at Maybank. But it is likely to weigh on GDP growth in the second half of the year, “regardless of Trump's tariffs,” as foreign importers have stockpiled ample supplies, she added.
Data released on Friday suggested that “domestic growth engines remain weak as retail sales growth responded only modestly to trade-in subsidies,” Tay said, citing sluggish consumer spending.
According to the statistics office, the country's population fell to 1.408 billion in 2024, a decrease of 1.39 million compared to 2023. In 2023 it fell by 2.08 million people compared to the previous year.
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Impulse boost
China is eager to boost economic growth and has taken several measures to that end, as a housing slump and uncertainty about future earnings continue to weigh on consumer spending and business confidence, adding to deflation concerns.
Since late September, Chinese authorities have called for a halt to property declines, cut interest rates and announced a five-year fiscal package worth 10 trillion yuan ($1.4 trillion) to ease local governments' funding crisis. 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 relying on a significant amount of policy stimulus and reform to boost the country's economy in 2025, boost domestic demand and stave off looming disinflation,” said Bruce Pang, distinguished research fellow at the National Institution for Finance and Development.
Top politicians have promised “proactive” fiscal measures and a “moderately loose” monetary policy stance for the current year. Some analysts expect the stimulus measures to take effect this year, but it will take longer to have a noticeable impact.
The government is expected to announce official growth targets for 2025 and additional stimulus measures at annual parliamentary sessions in March. Economists expect Beijing to keep its 2025 GDP growth target at around 5%, if not slightly lower.
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