China’s Economy Sees Uptick in Q4, But Challenges Persist
China’s economy showed signs of improvement in the fourth quarter of 2024, with a 5.4% year-on-year growth, exceeding expectations. This upswing was largely driven by a series of stimulus measures implemented by the government to boost economic growth.
Stimulus Measures Pay Off
The National Bureau of Statistics reported that the country’s GDP growth for the full year 2024 was 5%, slightly lower than the 5.4% growth seen in 2023. However, the fourth-quarter growth was a notable improvement from the 4.6% growth seen in the third quarter. The statistics bureau attributed this growth to the implementation of proactive and effective macro policies.
Retail Sales and Industrial Output Show Promise
Retail sales jumped 3.7% in December, surpassing expectations, while industrial output expanded 6.2% from a year earlier, underscoring China’s imbalance between domestic production and weak demand. Despite this, the full-year fixed asset investment rose 3.2%, shy of expectations, due to a steep decline in real estate investment.
Urban Unemployment Rate Ticks Up
The urban unemployment rate increased to 5.1% in December, up from 5.0% in the previous month. However, disposable income for urban residents grew by 4.4%, while that of rural residents increased by 6.3% in 2024.
Population Decline Continues
China’s national population fell by 1.39 million in 2023, to 1.408 billion people, continuing a downward trend.
Government Pledges Further Stimulus
Top leaders have pledged to implement proactive fiscal measures and a moderately loose monetary policy stance for the current year. Analysts expect stimulus measures to start taking effect, but it may take longer to see a significant impact.
Challenges Ahead
Despite the uptick in growth, China still faces challenges, including a real estate slump and uncertainty about future income, which have weighed on consumer spending and business confidence, adding to deflation concerns. The government is expected to reveal official growth targets for 2025 and additional stimulus measures at the annual parliamentary meetings in March.
Global Implications
The news comes just days before Donald Trump’s inauguration as the next U.S. president, who has threatened to impose additional tariffs on Chinese goods. This development could have significant implications for global trade and economic growth.
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