As of January 2025, China's economy has officially reported a GDP growth rate of 5% for 2024, reaching 134.9084 trillion yuan (approximately 18.77 trillion U.S. dollars). This figure aligns with the government's target, and the National Bureau of Statistics (NBS) noted that the fourth quarter saw an acceleration in growth to 5.4%, up from 4.6% in the third quarter [af4dcec2]. NBS head Kang Yi emphasized that these achievements are 'hard-won,' reflecting significant policy measures implemented since September, including cuts in lending rates and a substantial fiscal package amounting to 10 trillion yuan [af4dcec2].
In a New Year’s Eve speech on December 31, 2024, President Xi Jinping highlighted that GDP had surpassed 130 trillion yuan ($18 trillion) and grain production exceeded 700 million tons, showcasing the government's focus on economic stability [eee05ab8]. Manufacturing growth was reported at RMB 32.09 trillion ($4.49 trillion), marking a 10.6% increase, which indicates resilience in this sector despite broader economic challenges [eee05ab8].
However, skepticism surrounds these figures, as many analysts argue that they may be more politically motivated than reflective of the actual economic situation. Frederic Neumann from HSBC warned that the true state of the economy might be obscured by these optimistic reports [64422245]. Additionally, Kang Yi cautioned about a turbulent 2024 ahead, exacerbated by heightened geopolitical tensions, particularly with the United States [64422245].
Critics like Eswar Prasad from Cornell University have described the government's achievement as a 'Pyrrhic victory,' suggesting that the economic growth may not be sustainable in the long term [64422245]. Gao Shanwen, chief economist at SDIC Securities, speculated that the real growth rate could be as low as 2%, indicating significant discrepancies between reported and actual economic performance [64422245].
Local government debt is a growing concern, with estimates around 100 trillion RMB, contributing to a total debt of 129 trillion RMB ($18.25 trillion) and a debt-to-GDP ratio of 103% [eee05ab8]. High youth unemployment and stagnant consumption have also been reported, with 4.21 million restaurants closing from 2023 to March 2024 [eee05ab8]. Consumer sentiment remains a point of concern, particularly in urban areas like Beijing, where many residents express worries about their financial situations. Household spending is reported to be less than 40% of economic output, which is significantly below the global average [b4af0ae8]. Tea vendor Yang Aihua noted a decline in customers and spending, while Guo Jian from Shaanxi province echoed a sense of diminished consumer optimism [b4af0ae8].
Deflationary pressures are evident, with consumer prices rising only 0.1% in December 2024, and corporate profits reportedly fell by 4.7% from January to November 2024 [64422245]. While China's trade surplus reached a record $992 billion, the looming threat of U.S. tariffs poses a significant risk to this growth trajectory [64422245]. The ongoing property market crisis continues to be a major concern, with top builders experiencing a 28.1% drop in sales [64422245].
In response to these economic challenges, the Beijing government announced a 10 trillion yuan ($1.4 trillion) stimulus package in November 2024 and expanded subsidy schemes to encourage spending, but many residents, like cleaner Li Chunyu, feel that low wages limit their consumption capabilities [b4af0ae8][eee05ab8]. The economic slowdown presents political challenges for Xi Jinping's regime, as public sentiment increasingly reflects skepticism about the official growth claims [64422245].
Looking ahead, the World Bank has raised China's growth forecast for 2025, attributing this adjustment to expected fiscal spending and a stronger macroeconomic policy push planned for the year [af4dcec2]. However, a recent Reuters poll anticipates China's economic growth to slow to 4.5% in 2025 and further to 4.2% in 2026, with GDP growth estimated at 4.9% for 2024 [73e8d40d]. This anticipated slowdown is attributed to the significant risks posed by U.S. tariffs under President-elect Trump, which could impact exports, corporate investment, and household consumption [73e8d40d].
The Central Economic Work Conference held in December 2024 set a growth forecast of 4.8% for 2024, with a target of around 5% for 2025. However, the fiscal deficit is expected to expand to 4% of GDP in 2025, raising concerns about sustainability [997c4795]. Policymakers have emphasized the need for consumer-driven growth, as consumer spending remains below pre-pandemic levels [997c4795]. The anticipated issuance of 3 trillion yuan in special bonds aims to bolster economic activity amidst the ongoing trade war with the U.S. and looming risks of a deflationary trap [997c4795].
In a broader context, the International Monetary Fund (IMF) projects global growth at 3.3% for 2025, with inflation expected to decline to 4.2% this year and 3.5% next year. The U.S. growth forecast has been raised to 2.7%, while euro area growth is expected to rise modestly to 1% [95437a99]. Structural factors are causing divergence between the U.S. and Europe, with elevated economic policy uncertainty due to new governments and risks of the euro area slowing more than expected [95437a99]. The IMF emphasizes the urgent need for fiscal sustainability in several countries and the importance of structural reforms to boost growth [95437a99].