China’s GDP expanded by 5% in 2024, with momentum improving in Q4

January 27, 2025

China’s GDP growth accelerated to 5.4% in Q4, from 4.6% in Q3, boosting annual growth to 5%. Q4’s strong growth was mainly supported by the stimulus measures announced beginning in September and solid export growth. In December, industrial production growth surpassed the rebound in retail sales, highlighting the divergence in economic growth. Looking forward, the government committed to stronger fiscal and monetary policy support in 2025, though it remains to be seen how effective this will be in expanding domestic demand given the underlying structural weaknesses that are dragging down confidence levels, and in offsetting a potential slowdown in export growth due to external uncertainties.

Trusted Insights for What’s Ahead^®

• Status of China’s Economy: Economic activities improved towards the end of the year, but growth remained uneven
  December saw an acceleration in industrial production thanks to continued stimulus measures. Retail sales rebounded from a low level, but consumer confidence remained negative, while household income and spending growth were weaker than pre-COVID. 
• Investment Trends: Manufacturing remains robust but property contracts further
  Fixed asset investment (FAI) grew 3.2% y-o-y in Jan-Dec 2024, down from 3.3% in Jan-Nov. Manufacturing investment remained robust (9.2% in Jan-Dec vs. 9.3% in Jan-Nov) and infrastructure investment improved slightly (4.4% in Jan-Dec vs. 4.2% in Jan-Nov). Property investment continued to contract (-10.6% in Jan-Dec vs. -10.4% in Jan-Nov). Looking ahead, FAI will benefit from stronger policy support. This said, manufacturing investment will likely be affected by weak demand and external uncertainties. 
• Consumption Trends: Retail sales supported by stimulus, but confidence remains weak
  Retail sales growth picked up to 3.7% y-o-y in December 2024, from 3.0% in November. The improvement was due to the support from the government's consumer trade-in program, which boosted sales of white goods, as well as a recovery in spending on certain items, as the impact of the early start of the 'Singles Day' online shopping festival faded. In early January 2025, the government announced an expansion of the trade-in program and earmarked an initial RMB 81 billion (USD 11. 1 billion) to the program.
• Trade Trends: Chinese export growth accelerated but a potential tariff hike clouds the outlook for 2025
  Export growth accelerated to 10.7% y-o-y in December, from 6.7% in November, driven by importers front-loading orders to the US and EU ahead of anticipated tariffs. The potential of increased import tariffs by the US clouds China’s export growth in 2025.