The Chinese economy experienced a modest growth rate of 5 percent in 2024, primarily driven by a robust performance in the final quarter. Concerns over impending import tariffs from the United States have been a significant factor fueling trade activities. This growth rate marks a historic low for the Chinese economy, which grew by 5.2 percent in 2023. As the world’s second-largest economy, China is currently grappling with challenges such as a real estate market crisis, declining consumption, and an aging population.
Despite these hurdles, China’s Gross Domestic Product (GDP) saw an increase of 5.4 percent in the fourth quarter of 2024, according to the Chinese statistics office—making it the strongest quarterly growth in a year and a half. This growth, however, is modest when compared to some other major economies. For instance, the United States saw an economic growth of approximately 3 percent in 2024, driven largely by domestic consumption and technological advancements. The Eurozone reported a growth rate of 2.1 percent, continuing its steady recovery post-pandemic despite facing inflationary pressures. Meanwhile, India outpaced China with an impressive growth rate of 7 percent, bolstered by robust domestic demand and significant government investments in infrastructure.
In response to its economic pressures, the Chinese government has implemented various measures to revitalize the housing market and encourage bank lending. These measures include reducing mortgage loan costs and relaxing home purchase regulations. Additionally, the government has provided subsidies for electronic devices and car purchases to boost consumer spending.
However, questions remain regarding the long-term impact of these policies, as consumer demand may eventually plateau. Another economic driver in 2024 was the significant rise in Chinese exports to the United States, as American companies sought to replenish their inventories in anticipation of higher import tariffs. With Donald Trump set to reassume the presidency, threats of imposing 60 percent tariffs loom large.
The Chinese government is expected to announce its growth target for 2025 soon, which is anticipated to align closely with the 2024 target. In preparation for Trump’s upcoming presidency, China has pledged additional interest rate cuts and increased government spending to bolster its economy. Experts, as reported by Reuters, suggest that Beijing’s strategies primarily focus on industrial and infrastructural sectors rather than households. These measures, however, may exacerbate factory overcapacity, weaken consumer spending, and further fuel deflation.