In 2024, China’s economy grew by 5%, the slowest rate in 30 years outside the COVID-19 period. Challenges like a real estate crisis and weak domestic consumption persist, despite record exports of 3.4 trillion euros. Retail sales growth slowed to 3.5%, and unemployment surpassed 5%. Government measures aim to stimulate spending, but confidence issues hinder recovery. Analysts predict a further decline to 4.4% growth in 2025, raising concerns about a potential drop below 4% by 2026.
China’s Economic Landscape in 2024
In 2024, China experienced a modest economic growth rate of 5%, marking the slowest expansion in three decades, excluding the COVID-19 period. The government had aimed for approximately 5% growth for its Gross Domestic Product (GDP) following a 5.2% increase in 2023. This target comes amid ongoing challenges such as a persistent real estate crisis, sluggish domestic consumption, and trade tensions with major global economies.
According to data from the National Bureau of Statistics (NBS), China’s GDP reached an impressive 134.908 trillion yuan (approximately 17.867 trillion euros) in 2024. The country continues to grapple with the fallout from a severe real estate crisis, which has adversely affected consumer confidence and local government finances. However, a notable highlight is that China’s exports reached a record high of around 3.4 trillion euros, reflecting a year-on-year increase of 7.1% as reported in early January.
Challenges and Opportunities Ahead
The rise in imports has spurred industrial production, which saw a growth of 5.8% last year, up from 4.6% in 2023. Conversely, retail sales have significantly slowed, growing by just 3.5% compared to over 7% in the previous year, indicating that consumer spending remains under pressure as cautious households delay their purchases.
Economist Zhiwei Zhang from Pinpoint Asset Management describes the current economic indicators as “mixed.” While a policy shift in September helped stabilize the economy, leading to a GDP growth of 5.4% in the final quarter of the year, the unemployment rate has risen above 5%. This rise in unemployment is expected to further dampen consumer spending.
Foreign trade, a crucial component of China’s economic growth, is also facing headwinds due to elevated tariffs imposed by the U.S. government. The NBS acknowledged that the external economic environment poses increasing challenges, with domestic demand remaining insufficient and some companies struggling with production and operations.
In response to these economic challenges, Beijing has implemented a series of support measures aimed at encouraging consumer spending. Authorities plan to ease fiscal policies further in 2025 and continue initiatives such as extending subsidies for household appliance replacements. The central bank has also hinted at potential cuts to benchmark rates in the coming year.
However, analysts stress that more robust measures are necessary to stimulate consumption, particularly in light of the uncertain outlook for foreign trade. According to Harry Murphy Cruise of Moody’s Analytics, “Monetary policy support alone is unlikely to revive the economy.” He emphasizes that the issue lies in a crisis of confidence rather than credit availability, as families and businesses remain hesitant to borrow despite low interest rates. A significant and sustained policy stimulus is essential to bolster economic growth, a sentiment echoed by Zhiwei Zhang.
Despite government efforts, the anticipated rebound in consumption has yet to materialize. In December, China narrowly avoided deflation, with prices barely rising—a clear indicator of weak demand. As experts surveyed by AFP predict a further slowdown in growth to 4.4% in 2025, there are concerns that it may dip below 4% by 2026.