China’s Economy Surges in Q4 2024 with 5.4% Growth, Beating Expectations

China's Economy Surges in Q4 2024 with 5.4% Growth | Visionary CIOs

China’s Economy grew faster than anticipated in the final quarter of 2024, driven by government stimulus measures aimed at stabilizing the economy. This acceleration allowed Beijing to meet its annual growth target, despite ongoing challenges in domestic demand and global economic uncertainties.

The country’s gross domestic product (GDP) expanded by 5.4% during the fourth quarter, surpassing economists’ expectations of 5.0% growth. This marked a notable increase compared to the 4.6% growth in the third quarter, 4.7% in the second, and 5.3% in the first quarter. The strong fourth-quarter performance lifted China’s full-year GDP growth to 5.0% in 2024, aligning with the government’s official target of around 5%.

The policy adjustments made in September 2024 were credited for this stabilization. However, sustaining long-term economic momentum will require more substantial and consistent policy support.

Economic Indicators Show Mixed Trends

While GDP growth exceeded forecasts, several economic indicators presented a mixed picture. Retail sales rose by 3.7% in December compared to the previous year, surpassing the projected 3.5% increase. China’s economy saw strong industrial output growth, expanding by 6.2% and surpassing expectations of 5.4%. However, the data revealed an imbalance, as domestic production outpaced consumer demand.

Fixed asset investment for the year increased by 3.2%, slightly below the projected 3.3%. Real estate investment, a key economic sector, continued its decline, falling by 10.6% compared to the January-November period.

The urban unemployment rate increased slightly to 5.1% in December, up from 5.0% in November. Meanwhile, disposable income for urban residents grew by 4.4%, trailing behind overall economic growth, while rural residents saw a higher income rise of 6.3%.

Rising Demographic Concerns

China’s Economy population challenges continue to deepen. The national population declined to 1.408 billion in 2024, reflecting a drop of 1.39 million people compared to the previous year. Although birth rates showed a slight rebound, the overall population decrease highlights a worsening demographic crisis. The death rate also rose to 7.76% in 2024, up from 7.1% before the pandemic.

China’s statistics bureau noted that consumer spending remained weak, emphasizing that external factors could further strain the economy in 2025. Authorities have prioritized boosting domestic consumption, anticipating a moderate rise in consumer price inflation (CPI) this year.

Impact of Stimulus Measures

The fourth-quarter growth surge was largely driven by extensive policy interventions. Since late September, Chinese authorities have introduced various measures to support economic recovery. These include halting the real estate decline, cutting interest rates, and rolling out a five-year fiscal package worth 10 trillion yuan ($1.4 trillion) to address local government financing challenges.

To encourage consumer spending, Beijing also expanded programs allowing consumers to trade in old cars and home appliances for discounted new purchases.

Despite these efforts, challenges remain in reviving domestic demand. Retail sales economic growth responded only marginally to the incentives, highlighting persistent weak consumer sentiment.

Global and Political Factors

China’s economic recovery comes at a time of increasing global uncertainty. The data release occurred just days before Donald Trump’s presidential inauguration on January 20, 2025. Trump has expressed plans to impose additional tariffs of at least 10% on Chinese goods, raising concerns about potential disruptions in trade relations between the two economic powerhouses.

While export growth supported China’s recent economic momentum, analysts caution that this boost may be short-lived. Foreign importers have accumulated significant stockpiles, which could dampen demand later in the year, regardless of new US trade policies.

Outlook for 2025

China’s top policymakers have pledged to continue proactive fiscal policies and maintain a moderately loose monetary stance in 2025. However, experts suggest that while initial stimulus effects may be visible, broader economic recovery will take longer to materialize.

China’s economy surges with the support of proactive fiscal policies and a moderately loose monetary stance in 2025, but experts caution that while initial stimulus effects may be visible, a broader economic recovery will take longer to materialize.

As China works to sustain its recovery, the balance between policy support, demographic challenges, and global trade tensions will be critical in shaping the country’s economic trajectory in the coming year.

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