Emre Aytekin
20 January 2025•Update: 20 January 2025
BEIJING
China met its annual growth target in 2024, as its economy grew 5%, despite facing uncertainties and weak demand in post-pandemic recovery.
The growth followed a 5.2% increase in 2023, according to the Chinese National Bureau of Statistics (NBS).
China’s gross domestic product (GDP) reached 134.9 trillion Chinese yuan ($18.4 trillion) in January-December 2024.
The country’s economy grew 5.3% on an annual basis in the first quarter, 4.7% in the second, 4.6% in the third, and 5.4% in the fourth.
Despite the growth, domestic demand was weak and prices were stagnant last year, and the stimulus packages only resulted in a partial recovery. The economy felt the deflation pressure on producer and consumer prices.
Exports came to the fore as a key driver of growth at a time of weak domestic demand, led by rising demand for electric vehicles (EVs), batteries, solar panels, and wind turbines.
Chinese exports to the US surged 4.9% on the anticipation that President-elect Donald Trump would impose tariffs at the end of 2024, pushing China’s trade surplus to an all-time high of $992.1 trillion.
Foreign direct investments (FDIs) continued in 2024, down 27.1%, reaching a record low and seeing the sharpest decline since 1998 due to competition with the US and strengthening perceptions of geopolitical risks. The decline followed an 8% decrease in 2023.
Global geopolitical tensions, efforts of Western countries to reduce dependency on China, and changes in supply chains affected the investments in the country.
However, China’s outward direct investment (ODI) increased 11.2% in 11 months of 2024, as it focused on alternative markets in Southeast Asia, Africa, and South America for investments and acquisitions instead of Western countries. The rise was driven by China’s focus on infrastructure projects for the Belt and Road Initiative.
China’s industrial production, measuring industrial enterprises with an annual turnover of over $2.73 million, climbed 5.8% year-on-year in 2024, following a 4.6% increase in 2023.
Retail sales, indicating consumption and domestic demand, rose 3.5% on an annual basis, though it fell short of the 7.2% increase in 2023.
Fixed capital investments, which include infrastructure, machinery, and equipment expenditures, as well as property, climbed 3.2% in 2024 versus 3% in 2023.
Manufacturing investments soared 9.2% and infrastructure investments 4.4%, while the three-year-long decline in real estate investments affected the overall increase.
China’s real estate and housing sector negatively impacted domestic demand and overall growth last year.
Real estate investments fell 10.6% in 2024, following a 9.6% decline in 2023. The government’s policies and incentives to revitalize the real estate sector limited the impact.
Meanwhile, the country’s urban unemployment rate was 5.1% at the end of the year, down 0.1 percentage points. Unemployment in the 16-24 age group increased to 15.7% from 14.9%.
China is in the middle of an economic transition from low-tech manufacturing to high-tech production and the government’s attempts at emphasizing high-quality development, among others, failed to reach high-quality employment to the desired level. The NBS ceased data releases of unemployment by age groups after the rate of the 16-24 age group hit a record high of 21.3% in July 2023.
At the same time, China’s producer price index (PPI) fell 2.2% in 2024, following a 3% decline in 2023, and the consumer price index (CPI) remained unchanged at 0.2%, as price increases were below the government’s 3% inflation target.
China’s consumer prices were close to zero for 22 months and producer prices have been falling for 27 months, while the rest of the world has been struggling with high inflation since the end of the COVID-19 pandemic.
* Writing by Emir Yildirim in Istanbul.
