The macroeconomic climate improved in China (the second largest economy in the world, with a nominal dimension of over USD 18tn in 2024) at the end of last year, an evolution supported by several factors, including the gradual acceleration of the world economic activity and the policy-mix implemented by the policymakers in Beijing.

The annual growth pace of the GDP accelerated from 4.6% in 3Q 2024 to 5.4% in 4Q 2024, the best evolution since 2Q 2023, according to the estimates of the National Bureau of Statistics from Beijing[1], represented in the following chart.

Figure 1. The annual pace of the economic activity in China (%)

Source: representation of the author based on the data of the National Bureau of Statistics of China, January 2025

There can be noticed the increase of the manufacturing by a stronger pace compared to the dynamic of the services sector for the eighth quarter in a row in 4Q 2024, if we consider the PMI (Purchasing Managers’ Index), estimated by S&P Global and Caixin[2].

The performance of the manufacturing sector was supported by the increase of the volume of exports of goods of China, for the eighth month in a row in November, by an annual pace of 12.8%, according to the estimates of the Netherlands Bureau for Economic Policy Analysis (CPB)[3]. Overall, the volume of the exports of goods of China grew by an average annual pace of 11.0% during January – November 2024, a strong dynamic, compared to the increase by only 3.1% in USA, and to the contraction by 2.4% in Euroland.

In 2024 the economy of China grew by an annual pace of 5.0% (in line with the target set by the policymakers), slightly down from 5.2% in 2023, as can be noticed in the following chart.

There can be noticed the increase of the valued added in the secondary sector (the industry) by an annual pace of 5.3% last year, an evolution determined by the performance of the manufacturing (up by 6.1%). The energy & utilities and the mining components grew by annual paces of 5.3%, and 3.1%, respectively, in 2024.

Furthermore, the value added in the tertiary sector (the services) advanced by an annual pace of 5.0% in 2024, being noticed the increase of the IT&C component by 10.9%, expression of the strong incorporation of the technological progress (the Digital Revolution, and the Artificial Intelligence Revolution).

Last, but not least, the primary sector (the agriculture) rose by an annual pace of 3.5% in 2024, being noticed the increase of the output of grain by 1.6%, to a record high level of 706.5 million tons.

Overall, the economy of China presented a growth pace above its potential for the second year in a row in 2024, according to the results of the econometric estimates (done by using the database of the International Monetary Fund) represented in the following chart.

Figure 2. GDP vs. Potential GDP in China (%, YoY)

Source: econometric estimates of the author using the database of International Monetary Fund (IMF), January 2025

This evolution was determined by the continuity of the post-pandemic investment cycle – the investments in the fixed assets (excluding the real estate development sector) climbed by an annual pace of 7.2% in 2024. This, in turn, contributed to the improvement of the climate on the labour market, with the average annual rate of unemployment declining by 0.1pps to 5.1% in 2024.

On the flipside, the economy continues to be confronted with the challenges in terms of real estate market and with the slow dynamic of the consumer prices (up by an average annual pace of only 0.2% in 2024, with the core component up by only 0.5%, the weakest in more than one decade).

According to the recently updated forecasts of the International Monetary Fund (IMF)[4] (the winter report of 2025) the economic activity in China would increase by annual paces of 4.6% in 2025 and 4.5% in 2026.

This scenario is supported by several factors, including the low levels of the financing costs, the fiscal stimulus package launched in November 2024 (estimated at around 7.7% of GDP[5]), the prospects for the implementation of additional fiscal stimulus in 2025, and the increase of the retirement age.

The policymakers would announce the target for the growth of economic activity in China in 2025 in the Spring (month of March). Several important economic regions have already set the growth target at over 5% for 2025, the last year of the 14^th Five-Year Plan[6].

Among the main risk factors for the evolution of the Chinese economy in the short-run there can be mentioned the persistence of the global geo-political and trade tensions, the challenges related to the new technologies, and the possibility of a severe adjustment on the international financial markets.

[1] National Bureau of Statistics of China (2025). https://www.stats.gov.cn/english/PressRelease/202501/t20250117_1958330.html

[2] S&P Global (2025). https://www.pmi.spglobal.com/Public/Release/PressReleases?language=en

[3] Netherlands Bureau for Economic Policy Analysis (CPB) (2025). https://www.cpb.nl/en/world-trade-monitor-november-2024

[4] International Monetary Fund (2025). https://www.imf.org/en/Publications/WEO/Issues/2025/01/17/world-economic-outlook-update-january-2025

[5] Reuters (2025). https://www.reuters.com/markets/asia/chinas-economic-stimulus-measures-since-september-2025-01-08/

[6] China Briefing (2025). https://www.china-briefing.com/news/decoding-chinas-local-gdp-targets-in-2025/

About the author

Dr. Andrei RĂDULESCU

Dr. Andrei RĂDULESCU, Expert in global macroeconomy.