China Economic Quarterly Q4 2024
China’s economy is at a critical juncture as 2024’s key trends set the stage for 2025. Our latest report highlights Q4’s GDP rebound despite intensifying trade tensions and weak domestic consumption, while analysing the policies outlined during China’s Two Sessions to chart the course ahead. Initiatives to stimulate domestic demand, drive innovation, and accelerate structural reforms are poised to redefine economic priorities. Backed by a historic fiscal commitment and a 5% GDP growth target, these measures aim to address imbalances, counter global headwinds, and shape China’s economic trajectory for the years to come. Discover essential insights for businesses.
Highlights
Key takeaways from Q4 economic data
- Q4 rebound: China’s GDP grew 5.4% year-on-year in Q4 2024, lifting full-year growth to 5.0% and meeting the annual target. Industrial output, services, and retail sales accelerated, with the Manufacturing PMI signalling expansion.
- Exports surge: Net exports drove 30% of GDP growth—a high share echoing past peaks. Exports surged as firms frontloaded shipments ahead of the US transition, lifting the trade surplus to nearly $1 trillion. However, escalating global trade tensions suggest exports are unlikely to remain a key growth driver going forward.
- Policy and property focus: Stimulus measures target domestic demand, with the revival of consumption closely tied to stabilising the property market. Late-year signs of stabilisation suggest the sector may be nearing a bottom.
- Investment drivers: Manufacturing and high-tech sectors thrived, though property sector weakness weighed on fixed asset investment. Looking ahead, stimulus measures and high-tech expansion are expected to boost confidence and spur growth.
Topic in focus: China's Two Sessions 2025
- Growth target anchors 2025: China aims to achieve 5% GDP growth, concluding the 14th Five-Year Plan while advancing towards its 2035 goal of doubling GDP. This ambition is supported by a record-high 4% deficit-to-GDP ratio and RMB 11.86 trillion in bonds, including RMB 1.3 trillion in ultra-long-term bonds, despite global headwinds.
- Policy shift to consumption: A pivot to domestic demand takes center stage, underpinned by a 30-point action plan designed to boost spending through income growth, a RMB 300 billion trade-in programme, and improved social safety nets.
- Innovation fuels transformation: Investments in biomanufacturing, quantum technology, and AI are underpinned by a RMB 1 trillion venture fund to foster startups and reinforce China's technological leadership. The AI Plus initiative also accelerates industrial upgrades and modernisation.
- Openness meets reform: High-level opening up seeks to counter trade barriers by expanding service sector access for foreign investment. Structural reforms aim to bolster private enterprises and allocate consumption tax revenues to local governments.
- Geopolitical resilience: Policies from the Two Sessions equip the government to navigate risks from geopolitical tensions, leveraging fiscal firepower and structural reforms to safeguard growth against global uncertainties.
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