China’s fourth-quarter GDP grows 5.4%, beating market expectations

China’s economy grew 5.4% in the fourth quarter, beating market expectations, as a wave of stimulus measures boosted GDP growth and allowed Beijing to meet its annual target.

This last-quarter sprint helped lift China’s full-year GDP growth to 5.0% in 2024, according to China’s National Bureau of Statistics, in line with the official target of “around 5 %”.

The fourth-quarter rebound exceeded estimates by economists polled by Reuters for 5 percent growth, while topping 4.6 percent in the third quarter, 4.7 percent in the second quarter and 5.3 percent in the first quarter.

“The change in policy direction in September last year helped the economy stabilize in the fourth quarter, but it requires significant and persistent policy stimulus to boost economic momentum and support the recovery,” he said. said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management. a remark.

The statistics office warned: “We must be aware that the negative effects caused by the external environment are increasing and that domestic demands are insufficient.” He calls for the implementation of “more proactive and effective macroeconomic policies”.

Last year’s growth was slower than the 5.4% growth seen in 2023, post-pandemic. As part of an annual review of preliminary figures, the statistics office revised GDP growth for 2023 to 7.4% in late December, according to a CNBC calculation based on official data.

In December, retail sales jumped 3.7% from a year earlier, beating Reuters’ forecast of 3.5%. Industrial production rose 6.2% year-on-year, compared to a forecast of 5.4%, highlighting China’s imbalance between domestic production and weak demand.

Full-year fixed asset investment rose 3.2% in 2024, below the forecast increase of 3.3% in a Reuters poll, as falling real estate investment s is accentuated to a drop of 10.6% compared to the January-November period.

The urban unemployment rate increased to 5.1% in December from 5.0% the previous month.

The disposable income of urban residents increased by 4.4%, a slower pace than overall economic growth, while that of rural residents increased by 6.3% in 2024.

China is striving to boost economic growth and has taken several steps to this end.

Since late September, Chinese authorities have called for halting the decline in real estate, cutting interest rates and announcing a five-year budget plan worth 10 trillion yuan ($1.4 trillion). dollars) to alleviate the financial crisis of local governments. Beijing also expanded a program allowing consumers to trade in used cars and appliances and buy new ones at a discount.

“They are banking on a substantial influx of stimulus measures and reforms to revive the country’s economy in 2025, reinvigorating domestic demand and warding off a disinflationary threat,” said Bruce Pang, senior researcher at the National Institution for Finance and development.

Top leaders pledged to take “proactive” fiscal measures and adopt a “moderately loose” monetary policy for the current year.

Some analysts expect the stimulus measures to start taking effect this year, but it will take longer to see a significant impact.

The housing crisis and uncertainty over future incomes have weighed on consumer spending and business confidence, reinforcing fears of deflation.

China’s consumer inflation remained barely above zero, while wholesale prices fell for the 27th consecutive month in December, according to official data released last week.

The government is expected to unveil official growth targets for 2025 and additional stimulus measures at annual parliamentary meetings in March.

Economists predict that China will keep its 2025 GDP growth target at around 5%, or even slightly below.

Friday’s data comes just days before Donald Trump’s inauguration as the next US president on January 20. Trump said that soon after taking office, he planned to impose additional tariffs of at least 10% on Chinese goods. He also appointed China hawks to key cabinet positions.

The statistics bureau reported on Friday that the national population decreased by 1.39 million from 2023, reaching 1.408 billion people in 2024. The absolute decline in 2023 from the previous year was 2.08 million of people, according to the statistics office.