China’s economy grew 5.4% year-on-year in the fourth quarter, beating Reuters market forecasts
BEIJING (Reuters) – China’s economy grew 5.4% in the fourth quarter from a year earlier, official data showed on Friday, significantly beating analysts’ expectations and enabling the government to meet its annual growth target.
KEY POINTS
* GDP for 2024 +5.0% (compared to the target of around 5%)
* GDP in the fourth quarter +5.4% y/y (f’cast +5.0%, third quarter +4.6%)
* Q4 GDP +1.6% q/qs/adj (f’cast 1.6%, Q3 +1.3% revised)
* Industrial production in December +6.2% y/y (f’cast +5.4%, November +5.4%)
* Retail sales in December +3.7% y/y (f’cast +3.5%, November +3.0%)
* Investment in fixed assets in 2024 +3.2% (f’cast +3.3%, January-November +3.3%)
* Investment in real estate in 2024 -10.6% (January-November -10.4%)
* Fears of new US trade tariffs cloud the outlook for 2025
COMMENT:
ZHAOPENG XING, SENIOR CHINA STRATEGIST, ANZ, SHANGHAI
“GDP surprises the market at a high 5.4% y/y on a low base as well as policy stimulus. IP is strong on external demand at the start, while retail sales are normalizing to annual average levels.
“The strong figures pave the way for a growth target of around 5% in 2025 and offer an opportunity for China to review the risk side of the economy. The recent lack of liquidity and the Vanke saga suggest that macroprudence now weighs more heavily than growth in the policy agenda going forward.” We expect the PBoC to ease the short-term RRR cut immediately, but the rate cut may be delayed.”
WOEI CHEN HO, UOB, ECONOMIST, SINGAPORE
“That was mainly driven by the industrial sector in December. Part of that would be related to the start of production and exports before (US President-elect Donald) Trump comes back to office.
“That may not hold going forward, so the outlook for this year will continue to be weak. Retail is one of the most important things to watch now because it’s a reflection of consumer sentiment, which I think is still quite soft at the moment.”
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
“It’s a sigh of relief for Chinese assets, signaling that the 2024 stimulus measures are having an impact. Chinese markets continue to face structural headwinds as well as tariff risks, and the response to these will be the ultimate driver of long-term returns. The blow is quite strong on industrial manufacturing – perhaps due to exports to the U.S. before the new administration’s tariffs kicked in. Real estate is still weak, with retail sales coming in more than the impact of the stimulus.
“Positive signals, but we’ll have to see how stimulus and tariff risks develop from here to sustain momentum.”
BACKGROUND
* China’s economy has struggled to recover since the post-pandemic recovery quickly faded, with a lingering property crisis, weak demand and high levels of local government debt weighing heavily on activity.
* Policymakers have unveiled a flurry of stimulus measures to revive surging growth since last September and have vowed to do more this year as US President-elect Donald Trump, who has proposed steep tariffs on Chinese goods, is due to return to the White House next week.
* Analysts say the scope and size of China’s moves may depend on how quickly and aggressively Trump implements tariffs or other punitive measures.
* China is expected to unveil growth targets and stimulus plans during the annual parliament meeting in March.
* The world’s second-largest economy is likely to slow to 4.5% in 2025 and cool further to 4.2% in 2026 due to US tariff pressures, a Reuters poll showed.
