China's Surprise Q4 Rebound... Achieves Last Year's Economic Growth Target of 5% (Comprehensive)

4th Quarter Rebounds to 5.4%
Strong Retail and Industrial Production
Trade Disputes with the US Remain a Variable

China's annual gross domestic product (GDP) growth rate for last year recorded 5.0%, achieving the authorities' target of 'around 5% growth.'

On the 17th, the National Bureau of Statistics of China announced that last year's annual GDP reached 134.9084 trillion yuan (approximately 2,680 trillion won), recording a growth rate of 5.0% based on constant prices. This level meets not only the median forecast (4.9%) surveyed by major foreign media targeting 64 world economists but also the Chinese authorities' growth target of 'around 5%.'

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Earlier, China's economic growth rate slowed to 5.3% in the first quarter, 4.7% in the second quarter, and 4.6% in the third quarter of last year. Concerns were raised that achieving the target might be difficult, but thanks to the authorities' successive stimulus measures, the growth rate rebounded to 5.4% in the fourth quarter.

The solid consumption was behind this economic growth trend. Last year, China's annual retail sales increased by 3.5% compared to 2023. Retail sales last month rose by 3.7% year-on-year, slightly exceeding the market forecast of 3.5%.

Industrial production also drove the economic upturn. During the same period, China's annual industrial production increased by 5.8%, and industrial production in December last year rose by 6.2% year-on-year, accelerating compared to the previous month (5.4%). Investment by industrial type increased by 2.6% in the primary sector and 12.0% in the secondary sector, but the tertiary sector, including services, decreased by 1.1%.

The National Bureau of Statistics self-assessed, "In 2024, amid increasing internal and external pressures and complexities, we steadily promoted high-quality development based on the work principle of 'Wenzhong Qiujin (?中求?, advancing steadily amid stability).'" It added, "Especially by timely introducing a quantitative policy package, social confidence was effectively boosted." Frederick Neumann, HSBC Hong Kong branch's chief Asia economist, evaluated, "The Chinese economy is showing signs of recovery centered on industrial production and exports."

However, annual fixed asset investment increased by 3.2% during the same period, slightly below the market forecast of 3.3%. Real estate investment also fell by 10.6%, marking the largest annual decline on record. The statistics authorities explained that excluding the 10.6% decrease in real estate investment amid the real estate slump, the fixed asset investment growth rate expands to 7.2%. Additionally, China's population last year decreased by 1.39 million compared to the previous year, totaling 1.40828 billion, continuing a decline for the third consecutive year.

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Although the Chinese economy has succeeded in rebounding, it is considered too early to be complacent. Economist Neumann pointed out, "The strong growth rate last quarter may be the result of shipments being advanced to the United States," adding, "Once tariffs are imposed, production and exports will decrease, inevitably causing losses." Jiwei Zhang, chief economist at Pinpoint Asset Management, diagnosed, "For China to increase economic momentum and sustain the recovery, large-scale and continuous stimulus measures are necessary."

China, which maintained a high economic growth rate of 6-9% from 2011 to 2019 before the pandemic, saw its growth rate plunge to 2.2% in 2020. It rebounded sharply to 8.8% the following year due to the base effect, but showed instability by falling again to 3.0% in 2022. The growth rate in 2023, the first year of 'With COVID-19,' recorded 5.2%.