China reports robust 2024 growth after wobbles prompt stimulus
Summary
China said that its economy expanded by 5% last year, but a variety of weak signals have raised skepticism among some outside economists.SINGAPORE—China said its economy expanded by 5% last year, formally hitting its official growth target in a difficult year that saw officials respond to a sharp summertime deterioration in key indicators with its most aggressive stimulus in years.
The country’s National Bureau of Statistics said gross domestic product was buoyed by solid growth in investment and exports, which offset weaker consumption, highlighting the unevenness of Chinese growth.
Still, some outside economists say the robust headline numbers contrast with a variety of other data points that paint a weaker picture of economic health, including anemic consumer inflation, tax revenue and online spending. The economy remains mired in a real-estate slump and has been struggling with deflation. And it faces a further risk this year with U.S. President-elect Donald Trump’s pledge to impose stiffer tariffs on Chinese imports, which would squeeze China’s booming exports and pinch growth overall.
One possible explanation for the difference between Friday’s full-year GDP figures and earlier data can be found in a noticeable perking up of economic activity toward the end of the year after Chinese authorities swooped in with a barrage of monetary and fiscal stimulus measures in late September and October.
Friday’s data showed fourth-quarter growth accelerated to 5.4% year-over-year. Many economists remain skeptical about the durability of any such upturn.
Economic data out of China has long been dogged by questions about its reliability.
Others go further, arguing that the numbers simply don’t add up, suggesting an effort to artificially flatter the top-line figures to meet political goals. These outside economists point to Chinese authorities’ official reports of weaker tax revenues, bank lending and retail sales, among other clues.
“These growth figures stretch the bounds of credibility and will do little to build confidence or alter the picture of an economy that is on the ropes," said Eswar Prasad, professor of trade policy and economics at Cornell University and a former head of the International Monetary Fund’s China division.
“A better read of the economy is provided by flailing stock markets, continued turmoil in the property sector, a depreciating currency, and capital outflows. These indicators are hardly consistent with an economy hitting the growth target on the nose."
China’s National Bureau of Statistics couldn’t immediately be reached for comment.
Economic data out of China has long been dogged by questions about its reliability, including suggestions that official data have at times understated the economy’s performance. Those concerns have intensified in the postpandemic years as the economy’s problems have mounted and business, financial and economic data points have disappeared or been made inaccessible.
Other indicators, such as construction activity, suggest China’s economy is much weaker than the headline numbers report, some analysts say.
Few doubt China’s economy has significant strengths: Industrial production is expanding at a rapid clip as Beijing steers investment toward factories. Exports are booming, aided by low prices, a weak exchange rate and China’s world-beating expertise in newer products such as electric vehicles.
But other indicators run counter to those strengths. Real estate once accounted for as much as one quarter of China’s annual economic output, but a deep and prolonged property slump means the sector is shrinking, dragging on overall growth. Official measures of consumer confidence are in the doldrums and income and spending growth are weaker than in the past. China’s working-age population is falling.
Other indicators—such as tax revenue, sales at major online stores, construction activity, bank loans and nominal growth figures that aren’t adjusted for changes in prices—suggest China’s economy is much weaker than the headline numbers report, some analysts say.
Producer prices have been falling for more than two years and consumer prices rose just 0.1% in December. Sales at online marketplaces Taobao and Tmall in 2024 were just 0.2% higher than in 2023, according to data provider CEIC.
Bank loan growth slowed to an annual 7.6% in December, from 11% a year earlier. Government tax revenue in the year through November was 3.8% lower than the same period in 2023. Cement production fell every month last year. Without adjusting for inflation, growth over the first three quarters of 2024 slowed to an annual rate of around 4%, from a prepandemic rate of more than 7%, according to China’s official statistics agency.
A Wall Street Journal analysis of the financial results of top-tier listed companies in China found 23% reported a net loss in the third quarter, while more than half reported a year-over-year profit decline.
Rhodium Group, a New York-based research outfit, used these and other data to come up with its own estimate for Chinese economic growth in 2024. Rhodium put it at around 2.8%, an improvement from what it estimates was a 2.4% expansion in 2023, but well short of the official number published by the statistics agency Friday.
“There’s a big gap between their narrative and economic reality," said Logan Wright, Rhodium’s director of China markets research.
Wright also points to the fact that Chinese authorities have in the past year cut interest rates, rolled out financial support for the stock market and local governments, and signaled substantial new government borrowing next year. Such moves would be unnecessary if the economy were only registering a minor slowdown from 2023’s 5.2% official pace, he said.
Data published Friday showed industrial production rose 5.8% in 2024, outpacing a 3.5% rise in retail sales. Investment climbed 3.2% last year, up from the 3.0% increase seen in 2023.
Rebecca Feng, Grace Zhu and Xiao Xiao contributed to this article.
Write to Jason Douglas at jason.douglas@wsj.com
