China's Economy in 2024: 5% Growth, Key Successes, and Challenges
China ended 2024 with an economy growing 5%, beating analysts' expectations. Stimulus measures, an export boom, and a pickup in industrial production were the main drivers of growth. However, China faces significant challenges, including pressure from trade restrictions, a drop in real estate investment, and a demographic decline.
China's Economy in 2024 Key Successes
GDP up 5%
China’s economy grew strongly, with GDP expanding 5.4% in the fourth quarter, the best performance in a year and a half. This shows that economic activity is recovering from a slowdown caused by the pandemic and global economic turmoil.
Record industrial performance
Industrial production rose 6.2% in December, driven by a recovery in supply chains, government support for manufacturing, and increased demand for Chinese goods.
Retail sales up
Retail sales rose 3.8%, driven by subsidies aimed at stimulating consumption, particularly in electronics and automobiles.
Trade surplus
China posted a record trade surplus. However, falling prices for exported goods have been a negative factor, cutting into the profits of many Chinese companies.
Challenges Facing the Chinese Economy
Despite significant successes, the Chinese economy faces a number of serious problems:
Trade Restrictions
Since 2024, the United States has begun to impose tough tariffs on Chinese goods, which could reach 60%. These measures are aimed at reducing dependence on Chinese products. In addition, European countries are increasing criticism of low prices for Chinese goods, which also poses a threat to exports.
Real Estate Crisis
Real estate investment fell by 10.6%, the most severe decline in recent years. Oversupply in the housing market, falling prices, and problems for developers create additional risks for the economy.
Demographic Decline
In 2024, China's population fell by 1.4 million people. This reduces the labor force, reduces consumer demand, and increases the burden on the pension system.
Deflation
The Chinese economy has faced deflation for the second year in a row. Falling prices reduce business income, create expectations of further price reductions and undermine investment activity.
The role of stimulus measures in economic growth
The Chinese government has taken a number of measures to support the economy:
Subsidies: Significant funds were spent on stimulating consumption, especially in the electronics and automotive sectors.
Credit programs: Preferential lending conditions allowed small and medium businesses to resume operations.
Export incentives: The government introduced additional incentives for exporters to compensate for the decline in product prices.
These measures have helped China achieve impressive results, but their effectiveness in the long term remains questionable.Перспективы на 2025 год
In 2025, China plans to continue developing, but significant risks remain. Experts predict:
Growth slowdown: The economy is likely to grow by 4-4.5% due to pressure from trade restrictions and demographic problems.
Export support: China will look for new markets to reduce dependence on the US and Europe.
Real estate reforms: Measures to stabilize the housing market are expected.
Commentary by Sergey Tereshkin, CEO of Open Oil Market
“Chinese growth in 2024 is an impressive achievement that shows the flexibility of the economy and the effectiveness of government support measures. However, demographic problems and trade restrictions can seriously affect the country's prospects. China is at a stage when every strategic decision is key to the future.”
China's economy ended 2024 with 5% growth, demonstrating resilience to external and internal challenges. However, to maintain its leadership on the global stage, the country will have to solve key problems, including trade restrictions, demographics, and a crisis in the real estate sector. China's success in 2025 will depend on its ability to adapt to new conditions and continue to implement structural reforms.
