China recorded economic growth of 5% in 2024, the weakest pace in three decades excluding the Covid period, undermined by the sudden slowdown in consumption and while the arrival of Donald Trump at the White House revives the specter of a trade war.
Beijing had set a target of “around 5%” growth after a 5.2% increase in its gross domestic product (GDP) in 2023, in a context of persistent crisis in the real estate sector, sluggish domestic consumption and trade tensions with the United States and the European Union.
In 2024, China’s GDP reached 134.908 billion yuan (26.462 billion Canadian dollars), according to official estimates from the National Bureau of Statistics (NBS) released on Friday.
Eminently political and subject to doubt, the official GDP figure nevertheless remains highly scrutinized, given the weight of the country in the world economy.
A group of economists interviewed by AFP had anticipated a slightly lower growth rate (4.9%).
But the final figure is “often subject to strategic adjustments to reflect internal objectives”, François Chimits, economist at the Mercator Institute for China Studies, told 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 $5,000 billion, up 7.1% year-on-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 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 to postpone their purchases.
“Mixed” signals
These figures send a “mixed” message, said Zhiwei Zhang, chief economist at Pinpoint Asset Management, in a note.
“The change of political course [économique] last September allowed the economy to stabilize in the fourth quarter”, with GDP growth of 5.4% over the last three months of the year, but “the unemployment rate 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 its budgetary policy in 2025 and to continue its measures to support consumption, such as the recent extension of subsidies allowing households to replace their products, particularly 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 recover 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, with 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.
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