China’s economy grew by 5% in 2024, meeting the government’s target of “around 5%” growth, despite a slower pace than the previous year. The expansion was supported by strong exports and the implementation of government stimulus measures, which helped stabilize the economy after several challenges.
The economy showed a notable acceleration in the final quarter of the year, growing 5.4% in the October-December period. Exports surged as businesses and consumers rushed to avoid potential tariff hikes that could be imposed by U.S. President-elect Donald Trump on Chinese goods. This surge in exports, alongside the government’s targeted policy measures, helped restore public confidence and contributed to a strong recovery.
Manufacturing was a key driver of growth, with industrial output increasing by 5.8% year-on-year. Retail sales of consumer goods rose by 3.5%, while exports grew by 7.1%, and imports expanded by 2.3%.
However, China has faced several challenges, including weaker consumer spending and deflationary pressures. The recovery from the COVID-19 pandemic has been uneven, with the property sector, which once fueled significant business activity, experiencing a downturn. The country’s economy grew at a rate of 5.2% in 2023, and economists expect slower growth in the future, partly due to structural imbalances and an aging, declining population.
Zichun Huang from Capital Economics highlighted that increased fiscal spending has provided a boost in the short term but expects that growth will likely slow in 2025. Additionally, Huang pointed to the potential of renewed U.S. tariff measures under President Trump, which could further challenge China’s growth.
In a concerning demographic development, China’s population fell for the third consecutive year, reaching 1.408 billion by the end of 2024, marking a decline of 1.39 million people compared to the previous year. This population decline, combined with the challenges of an aging society, adds further pressure to the economy’s future growth prospects.
