BEIJING (Reuters) - China's economy ended 2024 on a better-than-expected footing, helped by a raft of stimulus measures, although the threat of a new trade war with the United States and weak domestic demand could hurt expectations for a broader recovery this year. confidence.
For the whole of 2024, the world's second-largest economy grew by 5.0%, achieving the government's annual growth target of around 5%. Analysts had forecast growth of 4.9%.
The economy grew by 5.4% year-on-year in the fourth quarter, significantly exceeding analysts' expectations and the fastest growth rate since the second quarter of 2023.
Main points
* GDP +5.0% in 2024 (target around 5%)
* GDP in the fourth quarter increased by 5.4% year-on-year (f'cast +5.0%, third quarter +4.6%)
* Q4 GDP +1.6% q/qs/adj (f'cast 1.6%, Q3 revised +1.3%)
* Industrial output increased 6.2% year-on-year in December (f'cast +5.4%, +5.4% in November)
* Retail sales increased by 3.7% year-on-year in December (f'cast +3.5%, +3.0% in November)
* Fixed asset investment +3.2% in 2024 (f'cast +3.3%, +3.3% from January to November)
* Real estate investment -10.6% in 2024 (-10.4% from January to November)
* Concerns about more U.S. trade tariffs cloud 2025 outlook
Market reaction:
China's main Shanghai stock market rose 0.3% after the data was released, while the blue-chip CSI 300 index rose 0.4%. The RMB exchange rate against the US dollar changed little.
Comment:
ELLIOT CLARKE, Senior Economist, Westpac, Sydney
"Overall, these results are in line with expectations, and the factors driving these results are also expected external sectors. And really making sure that they are well-positioned to withstand the uncertainty of U.S. tariffs and that consumers are not impacted." Dilemma, when we convene Congress, they need to do more on policy in February and March.
“They will cut interest rates further this year and cut triple R to support liquidity. So, everything will continue, but the real driver of the growth outlook has to be the fiscal side.
"They can achieve close to 5% growth in 2025. That's assuming they do take an aggressive stance on policy and that, as we've seen with trade this year, they're in a good position to avoid a recession." U.S. tariffs. "
GARY NG, Senior Economist, NATIXIS, Hong Kong
"The underlying headwinds are stronger than the headline GDP data suggests. With strong net export growth and more supportive stimulus, the economy is brewing some positive momentum toward stabilization.
"However, domestic demand remains weak, industrial production and retail sales have not rebounded, and the real estate industry in particular is still a drag on investment. If China wants to achieve a growth rate of more than 4.5% in 2025, deeper interest rate cuts and more policies will be needed Support.” Demand-side fiscal policy. "
LYNN SONG, Chief Economist, Greater China, ING, based in Hong Kong
“After meeting the growth target in 2024, the key issue for 2025 is when policymakers will set a growth target at the two upcoming meetings in March. Our baseline scenario is that policymakers choose to set another target of around 5% ” target, or at least “above 4.5%”.
"While tariffs and sanctions may create headwinds, setting such a target means we will see stronger fiscal policy support as well as continued monetary policy easing, and may be viewed by markets as a signal of confidence."
Alex Loo, FX and Macro Strategist at TD Securities in Singapore
“Despite recent stimulus measures, we believe the economic fundamentals are not solid and the March 5 budget is likely to deploy additional fiscal funds to cushion the Chinese economy from the impact of Trump (administration) policies.
“The focus will turn to Trump’s actions against China next week, with the imposition of 60% tariffs on China likely to prompt the People’s Bank of China to cut seven-day reverse repos next week to boost economic activity through monetary easing.
"In 2025, we expect China's GDP to grow by 4.8%. Judging from the local government's GDP target, a target of around 5% may be announced in the budget."
ANDY JI, Asia Foreign Exchange and Currency Analyst, ITC MARKETS, Shanghai
"The economic data from today to the end of 2024 are basically mixed, with some data differences, and the momentum until 2025 is obviously not good. In particular, the full-year retail sales and investment growth rates are 3.5% and 3.2% respectively, which are still showing with overall GDP growth below 5%.
"With changes to U.S. trade policy looming, this year's growth target will come under scrutiny again in March, although there will be little focus on a major miss of the 2024 inflation target of 'around 3 percent' due to weak consumer spending."
BEN Bennett, Asia Pacific Investment Strategist, Legal and General Investment Management, Hong Kong
"These data are a recognition of the economic transformation implemented by the authorities. The real estate industry is still under pressure and the authorities do not want to see a return to the old days of leverage and sharp price increases, so investors still need to remain patient."
Zhang Zhiwei, Chief Economist of Hong Kong Zhengdian Asset Management Company
"This batch of macro data shows mixed information. Although GDP growth unexpectedly rose in the fourth quarter, the unemployment rate rose to more than 5%. I think the change in policy stance in September last year helped stabilize the economy in the fourth quarter, but This requires substantial and sustained policy stimulus to boost economic momentum and sustain the recovery. Fiscal policy must take a more proactive stance in order to curb the rise in unemployment."
ZHAOPENG XING, SENIOR CHINA STRATEGIST, ANZ, SHANGHAI
“GDP surprised the market with 5.4% year-on-year growth, driven by a low base and policy stimulus. IP was strong due to external upfront demand, while retail sales normalized to annual averages.
"The strong data paves the way for achieving its 2025 growth target of about 5% and provides China with an opportunity to review the risk side of the economy. Recent liquidity strains and the Vanke incident have shown that macro-prudential is now on the policy agenda going forward. China is more important than growth. We expect China's central bank to ease interest rates immediately before the Lunar New Year in response to possible tariff shocks, but the rate cut may be delayed."
WEEI CHEN HO, Economist, United Overseas Bank, Singapore
“This was primarily driven by the industrial sector in December. Partly this was driven by production and exports being brought forward ahead of (U.S. President-elect Donald) Trump’s return to office.
"That may not continue, so the outlook for the year remains soft. Retail sales is one of the most important things we should be focusing on right now because it reflects consumer confidence, which I think is still pretty soft at this time. "
CHARU CHANANA, Chief Investment Strategist, Saxo Bank, Singapore
“This is a relief for Chinese assets and suggests that stimulus measures in 2024 are having an impact. The Chinese market still faces structural headwinds and tariff risks, and the response to these risks will be the ultimate driver of long-term returns and strong growth in industrial production. Possibly because exports to the U.S. remain weak ahead of new government tariffs taking effect, retail sales are more affected by stimulus measures.
"Positive signs, but we need to see how stimulus and tariff risks develop to maintain the momentum."
background
* China's economy has struggled to gain traction since its post-pandemic rebound quickly fizzled out, with a protracted real estate crisis, weak demand and high levels of local government debt weighing on activity.
* Policymakers have launched a series of stimulus measures since September to revive flagging growth and have promised more this year as U.S. President-elect Donald Trump proposes steep tariffs on Chinese goods , he will return to the White House next week.
* Analysts say the scope and scale of China's measures may depend on how quickly and vigorously Trump imposes tariffs or other punitive measures.
* China is expected to unveil growth targets and stimulus plans during its annual National People's Congress meeting in March.
* Economic growth in the world's second-largest economy may slow to 4.5% in 2025 and further cool to 4.2% in 2026 due to U.S. tariff pressure, a Reuters survey showed.
(Reporting by Reuters Asia Bureau; Compiled by Subhranshu Sahu)