Official data shows China's economy grew 5% last year, driven by a manufacturing surge as companies brought forward exports in anticipation of rising U.S. tariffs and Beijing stepped up stimulus efforts.
The National Bureau of Statistics said the economy "recovered significantly" in the fourth quarter of 2024, growing by 5.4% year-on-year, rebounding from the slowdown in the third quarter.
“Adopting a package of incremental (stimulus) policies... The 2024 GDP data released by the National Bureau of Statistics on Friday stated that confidence has been effectively boosted and the economy has recovered significantly.
The annual figure was slightly higher than economists' forecast of 4.9%, lagging last year's 5.2% growth and the lowest since 1990 (excluding years distorted by the coronavirus pandemic).
The data comes as Beijing attempts to revive strong growth in its two-speed economy, with strong exports and manufacturing offsetting weak household confidence.
In September, the central bank announced an easing of monetary policy and support for the stock market. Beijing has also launched a plan to refinance local government debt and accelerate stimulus spending on infrastructure and other areas.
But economists worry that China faces entrenched deflation risks. Producer prices have been negative for more than two years, and consumer prices rose just 0.1% in December.
Kang Yi, director of the National Bureau of Statistics, said at a press conference that 2024 can be said to be "a highly turbulent year, with intensified geopolitical conflicts and escalating trade protectionism."
Analysts expect Beijing to set an official growth target of around 5% for 2025 for the third consecutive year at a rubber-stamp parliamentary meeting in March, although given threats by incoming U.S. President Donald Trump to raise tariffs, Trade is expected to face challenges.
"The adverse impact of the external environment is deepening. Domestic demand remains insufficient," Kang said, adding that "employment and income growth" are under pressure.
Retail sales rose 3.5% last year as consumer confidence remained weak amid a protracted slump in the housing market, while industrial output rose 5.8% thanks to strong growth in manufacturing.
Home prices fell in China's largest cities, but new home prices rose in Shanghai.
In another sign of the long-term structural challenges China faces, China's population fell by nearly 1.4 million in 2024, its third consecutive year of decline, with the number of births rising slightly from the previous year to 9.54 million, but the number of deaths standing at 10.93 million.
Frederic Neumann, chief Asia economist at HSBC, said that while China's economic growth exceeded expectations, the overall data "hides some underlying vulnerabilities".
"The surge in growth was actually driven by industrial production, suggesting exports were supported by expectations of U.S. import restrictions," Neumann said. "As U.S. import restrictions come into play, this will inevitably lead to "Return."
China's trade surplus with the rest of the world reached a record level of nearly $1 trillion in 2024, customs data showed last week, helped by strong export growth as Chinese manufacturers boosted production to make up for weak domestic demand. Import growth remains moderate.
"The Achilles' heel of the Chinese economy right now is actually its hesitant consumers," Neumann added. "All of this points to the need for more stimulus, particularly to support consumer spending power."
The news also highlights skepticism about China's official data, which some analysts are increasingly concerned does not reflect underlying weakness in the economy.
Eswar Prasad, a professor at Cornell University, said: “The Chinese government’s apparent achievement of its growth targets is a Pyrrhic victory, further undermining the credibility of official data and, at best, reflecting the underlying vulnerabilities that remain in the Chinese economy. and a loss of confidence in government decision-making,” senior fellow at the University and the Brookings Institution.
Morgan Stanley analysts said better-than-expected growth in the fourth quarter "is likely to be short-lived" and could slow from the second quarter due to export front-loading and insufficient stimulus measures.
"We believe that better data may have reduced Beijing's sense of urgency and that policies on housing and social welfare may continue to be insufficient," they wrote in a note.
After the data was released, the CSI 300 index of mainland China's listed blue-chip companies rose 0.5% in early trade after opening lower.
The benchmark is still down about 14% from its peak on Oct. 8, when stimulus announcements sparked a rally in stocks.
Additional reporting by William Sandlund and Haohsiang Ko in Hong Kong, William Langley in Guangzhou and Wenjie Ding in Beijing