China – Growth is a "positive surprise", but serious questions remain
- 2025.04.03
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- The last quarter saved the year...
- ... but does not dispel the doubts
- Questions for 2025
- Conclusion
In summary
China has released fourth-quarter and full-year 2024 growth figures and announced that its 5% target has been met. The consensus of economists, who were not expecting such a performance, found these numbers – even thought they were positive – "surprising".
While China achieving its growth target is nothing new, the slowdown in a number of sectors (e.g. real estate and consumer goods) and the deflationary trend in the economy suggest that the reported growth number may be overstated.
Worries over the strength and, above all, the sustainability of China’s economic model have not faded. There is also growing doubt about the transparency and credibility of China’s statistical machinery.
Lastly, 2025 will necessarily be affected by changes in the US-China relationship, which is currently the leading driver of uncertainty.
China presents itself weakened in the face of a provocative and combative Donald Trump. COVID-19 has left deep scars on the economy and society: real estate crisis, household confidence crisis manifesting in domestic demand that is no longer recovering, massive and sometimes ineffective indebtedness of local authorities, revealing the limits of the Chinese tax system. In reality, it is an entire economic system that seems to be reaching its limits today, revealing certain inconsistencies that are difficult to mask.
Sophie WIEVIORKA, Economiste - Asia (Excluding Japan)