The Chinese economy recorded growth of 5% in 2024, a historically low score

A questionable score

Eminently political and subject to doubt, the official GDP figure nevertheless remains highly scrutinized, given the weight of the second largest economy in the world. A group of economists interviewed by AFP had anticipated on average a slightly lower growth rate (4.9%). But the final figure is “often subject to strategic adjustments to reflect internal objectives,” François Chimits, an economist at the Mercator Institute for China Studies, warned AFP at the start of the week.

China is struggling to recover from a serious real estate crisis which is weighing on consumer morale and the finances of local authorities. A rare improvement in this dark picture, in 2024, the Asian giant’s exports reached a record level of around 3,400 billion euros, up 7.1% over one year, according to official data published Monday.

The increase in imports also resulted in an acceleration in industrial production, which increased by 5.8% last year, compared to 4.6% in 2023. Conversely, retail sales increased. recorded a clear slowdown, increasing by 3.5% last year compared to an increase of more than 7% in 2023: a drastic slowdown signaling consumption still under pressure at a time when worried households prefer postpone their purchases.

“Mixed” signals

These figures send a “mixed” message, said Zhiwei Zhang, economist at Pinpoint Asset Management. “The change of political (economic) course in September allowed the economy to stabilize in the fourth quarter”, with growth of 5.4% in GDP over the last three months of the year, but “the rate of unemployment has exceeded 5%,” observes the expert.

The darkening of the labor market is likely to further dampen consumption. Clouds are also gathering over foreign trade, the engine of economic growth, suspended from the high customs duties promised by US President-elect Donald Trump. “Adverse effects due to the external environment are increasing, domestic demand is insufficient, some enterprises are encountering difficulties in production and operation, the economy continues to face obstacles and challenges,” the NBS acknowledged on Friday .

“Crisis of confidence”

Certainly, Beijing increased support measures last year, the most massive in recent years, to encourage millions of consumers to spend. The authorities have promised to further relax their budgetary policy in 2025 and to continue its consumer support measures, such as the recent extension of subsidies allowing households to replace their household appliances.

In recent weeks, the Chinese Central Bank has indicated that it is considering further cuts in its key rates in 2025. But according to analysts, other efforts will be necessary to boost consumption, especially given the more uncertain outlook for foreign trade.

“Monetary policy supports alone will probably not be enough to turn around the economy,” Harry Murphy Cruise of Moody’s Analytics told AFP. “China is suffering from a crisis of confidence, not credit, families and businesses do not have enough confidence in the economy to borrow, even if it is very cheap,” he adds.

“A significant and lasting policy stimulus is needed to strengthen economic dynamics and support the recovery,” adds Zhiwei Zhang. However, the government’s efforts are still struggling to translate into a rebound in consumption: China narrowly escaped deflation in December, prices barely increasing, a sign of still sluggish demand.

Faced with these challenges, the panel of experts surveyed by AFP forecasts a further slowdown in Chinese growth to +4.4% in 2025, with the risk that it will stumble below 4% in 2026.