BEIJING (Reuters) – China’s economy ended 2024 on a better-than-expected footing helped by a flurry of stimulus measures, although the threat of a new trade war with the United States and weak domestic demand could hurt confidence in a broader recovery this year.
Exports, one of the few bright spots, could lose steam as US President-elect Donald Trump, who has proposed heavy tariffs on Chinese goods, is set to return to the White House next week.
For the full year 2024, the world’s second-largest economy grew 5.0%, data from the National Bureau of Statistics (NBS) showed on Friday, meeting the government’s annual growth target of around 5%. Analysts had predicted a growth of 4.9 percent.
The economy grew 5.4% in the fourth quarter from a year earlier, significantly beating analysts’ expectations and marking the fastest growth since the second quarter of 2023.
Analysts polled by Reuters had forecast fourth-quarter gross domestic product (GDP) to rise 5.0% from a year earlier, accelerating from 4.6% in the third quarter as a series of support measure.
“The Chinese economy is showing signs of recovery, led by industrial production and exports,” said Frederic Neumann, chief Asia economist at HSBC in Hong Kong.
However, he added, last quarter’s strong GDP growth may already have been flattered by a loading of US shipments – something that will inevitably lead to a rebound with lower output and exports once tariffs start to bite hard.
“As exports come under pressure in 2025, reduced by US import restrictions, there will be an even greater need to apply domestic incentives.”
Chinese stocks gained some support after the GDP data. Mainland China blue chips were up 0.3% as of 0207 GMT, while Hong Kong added 0.14%.
The yuan was little changed against the dollar.
On a quarterly basis, GDP rose 1.6% in October and December, compared with a forecast 1.6% increase and a revised 1.3% rise in the previous quarter.
China’s economy has struggled to recover since the post-pandemic recovery quickly faded, with a lingering property crisis, mounting local debt and weak consumer demand weighing heavily on activity.
Policymakers have promised more stimulus this year, but analysts say the scope and size of China’s moves could depend on how quickly and aggressively Trump implements tariffs or other punitive measures.
But even as strong exports lifted the country’s trade surplus to a record $992 billion last year, the yuan currency has come under selling pressure. A dominant dollar, sliding Chinese bond yields and the threat of higher trade barriers pushed the yuan to 16-month lows.
A raft of December economic readings on Friday suggested the economy gained strength heading into the new year, helped by a flurry of government stimulus measures.
Even the real estate sector witnessed signs of recovery as new home prices stabilized in December for the first time since June 2023, NBS data showed earlier on Friday. But throughout the year, investments in real estate fell 10.6% compared to the previous year, which represents the largest annual decline in history.
Industrial production rose 6.2% from a year earlier in December, accelerating from 5.4% in November and beating expectations for a 5.4% rise in a Reuters poll. It marked the fastest growth since April last year.
Retail sales, a measure of spending, rose 3.7% last month, accelerating from 3.0% in November as consumers began preparing for the eight-day Lunar New Year holiday in January.
“It (will) require large and persistent policy stimulus to boost economic momentum and sustain the recovery. To curb the rising unemployment rate, fiscal policy must become more proactive,” Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.
As companies remained cautious about adding workers ahead of the festival and worries about possible trade disputes with the US, the unemployment rate based on a national survey rose to 5.1% in December from 5.0% in November.
