China’s Economic Growth in 2024: An Uneven Reality

(This Jan. 17 story has been republished to fix a formatting error, with no changes to text)

BEIJING (Reuters) – China’s economy grew 5% last year, matching the government’s target, but with many citizens reporting worsening living standards. The government struggles to translate industrial and export gains into consumer benefits.

This imbalance raises concerns about deepening structural problems in 2025, as China plans to achieve similar growth by incurring more debt to counter the effects of anticipated U.S. tariff hikes.

December data indicated industrial output significantly exceeded retail sales, and the unemployment rate increased, underscoring the economy’s supply-side strength alongside its domestic weaknesses. Export-driven growth was partly supported by factory gate deflation, making Chinese goods competitive globally, yet it also led to rising trade tensions and declining corporate profits domestically.

Andrew Wang, executive in the electrical vehicle sector, noted a 16% revenue drop last year, forcing job cuts. He described the economic outlook as increasingly demanding, likening it to increasing the difficulty on a treadmill.

China’s National Bureau of Statistics and the State Council Information Office did not respond to inquiries regarding official data accuracy. Eswar Prasad, a Cornell University professor, expressed skepticism about the reliability of the reported growth amid ongoing domestic challenges.

Analysts argue that without a shift in stimulus focus toward households, the risks of factory overcapacity and deflation could rise. Nomura analysts emphasized the need for fiscal and monetary reform to foster sustainable recovery.

Chinese exporters anticipate that rising tariffs will significantly impact profits and job security. In the backdrop of these economic challenges, Beijing’s push to boost domestic consumption remains vague, with few policies announced.

Although civil servants received a pay increase, many private sector employees faced wage reductions. Young professionals, like 25-year-old investment banker Jiaqi Zhang, expressed unease about their job security and reduced spending.

Despite reported growth beating economists’ 2024 forecasts, many analysts warn of an inflated narrative due to anticipatory shipments to the U.S. Investors’ confidence remains shaky, with market responses reflecting uncertainty about the real state of China’s economy.

Although Beijing has consistently met its growth targets, skepticism about the accuracy of economic data is on the rise. Some economists predict actual growth rates to be vastly overstated.

In summary, analysts believe if China’s true growth figures fall below reported rates, it would indicate broader domestic demand problems, exacerbating global trade issues.

($1 = 7.3273 Chinese yuan)