China’s economy hit the government’s growth goal last year, after an 11th hour stimulus blitz combined with an export push before looming US tariffs turbocharged activity in the final quarter.
Gross domestic product rose 5% in the world’s second-largest economy, data released by the National Bureau of Statistics on Friday showed, slightly exceeding the median estimate of 4.9% in a Bloomberg survey. President Xi Jinping said on New Year’s Eve the country was expected to meet the goal of around 5%.
“The biggest bright spot in the economy last year was exports, which was very strong especially if price factor was excluded,” Jacqueline Rong, chief China economist at BNP Paribas SA. “That means the biggest problem this year will be US tariffs.”
China has vowed further monetary easing and stronger public spending this year, as the economy braces for Donald Trump’s return to the White House. The US president-elect has threatened tariffs of as high as 60% on Chinese goods that could decimate trade with the Asian country and hurt a key growth driver.
The yuan strengthened 0.1% against the dollar in both the onshore and offshore markets after the data release. The benchmark CSI 300 index of Chinese stocks erased an earlier loss of 0.5%.
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The numbers also suggest Beijing’s policy pivot since late September helped counter headwinds from a years-long property slump and entrenched deflation.
The economy grew 5.4% in October-December from the same period a year earlier, the fastest pace in six quarters and better than economists’ median forecast of 5%. The pickup was more pronounced on a quarterly basis, with the growth of 1.6% the highest since March 2023.
Industrial production was unexpectedly strong partly because global businesses front-loaded their shipments to dodge any new levies. Output rose 6.2% in December compared to the previous year, the fastest pace since April.
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The factory upswing last month contrasted sharply with stagnating demand at home. Retail sales gained at a faster rate but still expanded below 4%, while unemployment climbed for the first time since August. Property sales extended a contraction that started more than a year ago.
China’s trade surplus soared to a record last year, a boon to the economy that may be threatened not just by Trump’s tariffs but a growing number of countries complaining of a flood of cheap Chinese goods. Falling prices also mean exporters are earning less for their products as the volume of Chinese trade outpaced value.
China’s nominal GDP growth, which is unadjusted for falling prices across the economy, expanded 4.2% in 2024, based on Bloomberg calculation of official data. That’s the slowest pace since 2020 and reflects the impact of persistent deflation, which has lasted for the second straight year.
The economy was “overall stable and progressed with stability” in 2024, the NBS said in a statement. “But we also need to see that the negative impact from changing external environment is deepening, domestic demand is insufficient, some companies are facing difficulties with production and operation, and the economy still faces plenty of difficulties and challenges,” it added.
Fiscal policy is taking centre stage of China’s stimulus push this year as the scope of monetary loosening is constrained by mounting pressure on the yuan to depreciate and capital outflow concerns. The People’s Bank of China has so far refrained from taking steps such as a cut to banks’ reserve requirement ratio, which affects how much money they can lend.
Highlights of other key economic indicators:
- Retail sales gained 3.7% last month, stronger than an estimated 3.6% increase
- Property investment contracted 10.6% in 2024, booking its worst year since records began in 1987. The slump dragged on fixed-asset investment, which rose 3.2% compensated by manufacturing and infrastructure spending, versus a 3.3% rise projected by economists
- The urban jobless rate was 5.1% in December, slightly higher than 5% in November
