China: Real GDP Grew 5.0% in 2024

While this growth rate is in line with the targets set by Beijing, it’s still one of the weakest figures we’ve seen in three decades (excluding the COVID-19 pandemic). Several factors contributed to this lacklustre performance. The economy has been battered by the persistent real estate crisis and rather muted domestic spending. China’s ongoing trade disputes with the United States and European Union are also bringing the economy down. Despite these challenges, Chinese nominal exports grew 7.1% year-over-year, even though the export price index fell 5.3% in 2024.

The stimulus measures announced during the year did little to resolve the real estate crisis, which began in 2021. While they did help the country avoid the worst, they failed to rectify underlying issues, like the high level of local government debt. As a result, a two-speed economy has emerged, with the external sector growing more quickly than the domestic economy. The relatively high unemployment rate—at 5.1% in December—reflects this weakness in the domestic sector. The unemployment rate has historically been under 4% over the last decade.

That said, China’s real GDP growth did accelerate appreciably in the last quarter of 2024. The quarterly gain of 1.6% was its strongest since winter 2023. Without this impressive performance, the Chinese government would not have reached its growth target.

While real GDP growth largely relied on the external sector in 2024, Donald Trump’s return and threatened tariffs could put a damper on economic activity this year. The government will likely ramp up its stimulus efforts but, without any measures to diversify the economy, China may continue to disappoint.