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China’s Economic Growth Hits Slowest Pace in Decades as Leaders Brace for Trump’s Trade Threats
China's economy grew at its slowest rate in decades, sparking concerns as it faces a tough year ahead with rising domestic challenges and looming trade tensions under Trump.
ND
by News Desk
2025-01-17
China’s Economic Growth Hits Slowest Pace in Decades as Leaders Brace for Trump’s Trade Threats

China has posted one of its lowest economic growth rates in decades, highlighting the country’s struggles amid a complex mix of internal economic pressures and growing external challenges. On Friday, the National Bureau of Statistics (NBS) reported that China’s economy expanded by just 5% in 2024, slightly above analysts’ expectations but still a slowdown from the 5.2% growth seen in 2023.

 

The data underscores the challenges China has faced, including a debt-laden property market, sluggish consumer spending, and geopolitical tensions. Despite these obstacles, China’s growth rate for 2024 was higher than the forecast of 4.9% seen in a recent AFP survey, with retail sales and industrial production figures showing a mixed performance. Retail sales rose by just 3.5% year-on-year, down significantly from 7.2% in 2023, while industrial output grew by 5.8%, up from 4.6% the previous year.

 

Although the last quarter of the year showed promising signs, with a 5.4% jump in growth, the data overall paints a picture of a sluggish recovery. Zhiwei Zhang, president of Pinpoint Asset Management, noted that the government’s recent stimulus measures have helped stabilize the economy but that more sustained action is required to ensure recovery. Zichun Huang, a China economist at Capital Economics, echoed this sentiment, suggesting that the property sector’s support measures could provide a boost to the economy in the coming months.

 

Despite the upbeat figures for the fourth quarter, the full-year data marks China’s weakest growth rate since 1990, excluding the pandemic years. Analysts predict that China’s growth could slow further, potentially dipping below 4% in the next two years. The country’s post-pandemic recovery has been slower than expected, with domestic consumption remaining weak and local governments burdened by debt.

 

In a rare bright spot, China’s exports reached a historic high in 2024, but growing concerns about trade relations with the U.S. under President-elect Donald Trump have cast a shadow over future prospects. Trump has vowed to impose heavy sanctions on China during his second term, adding uncertainty to the country’s trade surplus and overall economic outlook.

 

The NBS data also revealed that China’s production of fossil fuels, including coal and natural gas, increased last year, casting doubt on hopes that China would see a significant decline in emissions. With domestic consumption weak, the country’s economy is still heavily reliant on exports and fossil fuel production.

 

To combat the slowdown, the Chinese government has introduced a series of economic stimulus measures, including interest rate cuts, easing local government debt, and expanding subsidies for household goods. However, analysts caution that monetary policy alone is unlikely to solve the underlying issues. Moody’s Analytics’ Harry Murphy Cruise suggested that China is facing a crisis of confidence rather than a credit crisis, making it crucial for policymakers to focus on bolstering domestic demand.

 

Looking ahead to 2025, the outlook for China’s economy remains uncertain. Beijing is likely to maintain its growth target of around 5%, but experts warn that the government must intensify its efforts if it hopes to meet that goal. While some short-term recovery signals have emerged, analysts like Ting Lu from Nomura urge caution, emphasizing that the government cannot afford to become complacent.

 

As China navigates its slow recovery, global markets and policymakers will closely monitor how the world’s second-largest economy responds to both domestic challenges and the looming risks posed by changing trade dynamics under President Trump’s administration.

 
Tagged:

USChinaRelations

EconomicChallenges

ChinaEconomy

GrowthSlowdown
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