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China’s economy delivered stronger-than-expected growth in the fourth quarter of 2024, as a series of robust stimulus measures from Beijing began to yield results. Gross domestic product (GDP) expanded by 5.4% year-on-year in the three months ending December, surpassing market expectations of 5% and sharply accelerating from 4.6% growth in the previous quarter, according to official government data released on Friday.
Quarter-on-quarter, GDP rose by 1.6%, in line with analyst forecasts. This brought China’s annual GDP growth to 5%, matching Beijing’s official target for 2024 and maintaining the same growth rate for a second consecutive year.
Stimulus Measures Begin to Take Effect
The upbeat Q4 performance underscores the impact of Beijing’s most aggressive stimulus campaign in recent years. Since late September, the government has unveiled a series of measures aimed at revitalizing local manufacturing, addressing state government debt, and shoring up the struggling property sector.
The results indicate that these policies are beginning to bear fruit, with the economic momentum gaining traction in the final quarter of the year.
Looking Ahead: Fiscal Stimulus and Trade Challenges
Beijing is gearing up for another year of proactive fiscal measures in 2025, including increased debt issuance and a larger GDP deficit to counter mounting economic challenges.
A major concern is the anticipated escalation in trade tensions with the U.S. under President-elect Donald Trump, who has pledged to impose steep tariffs on Chinese imports starting “day one” of his second term. These measures are expected to provoke retaliatory actions from China and could amplify the need for further domestic economic support.
Deflation and Private Consumption in Focus
Despite recent gains, deflation continues to weigh on China’s economy, highlighting the need for policies to boost private consumption. Persistent price declines have curbed household spending and posed a challenge to achieving sustained economic growth.
While recent stimulus measures have bolstered growth, a Reuters poll projects that China’s GDP growth could slow to 4.5% in 2025, reflecting heightened trade headwinds and other macroeconomic pressures.
As China navigates the dual challenges of domestic economic reform and escalating external risks, its policy decisions in the coming months will play a critical role in shaping the trajectory of its economic recovery.
