Market Data 
BEIJING (Reuters) -China’s economy ended 2024 on better footing than expected helped by a flurry of stimulus measures, although the threat of a new trade war with the United States and weak domestic demand could hurt confidence in a broader recovery this year.
KEY POINTS
* 2024 GDP +5.0% (versus target of around 5%)
* Q4 GDP +5.4% y/y (f’cast +5.0%, Q3 +4.6%)
* Q4 GDP +1.6% q/q s/adj (f’cast 1.6%, Q3 +1.3% revised)
* Dec industrial output +6.2% y/y (f’cast +5.4%, Nov +5.4%)
* Dec retail sales +3.7% y/y (f’cast +3.5%, Nov +3.0%)
* 2024 fixed asset investment +3.2% (f’cast +3.3%, Jan-Nov +3.3%)
* 2024 property investment -10.6% (Jan-Nov -10.4%)
* Fears of more U.S. trade tariffs clouding 2025 outlook
MARKET REACTION:
China’s main Shanghai stock market was up 0.3%, while the blue-chip CSI 300 index was 0.4% higher after the data release. The yuan was little changed against the dollar.
COMMENTARY:
BEN BENNETT, ASIA-PACIFIC INVESTMENT STRATEGIST, LEGAL AND GENERAL INVESTMENT MANAGEMENT, HONG KONG
“The data is an endorsement of the economic shift that authorities have implemented. The property sector is still under pressure and authorities don’t want to see a return to the old days of leverage and big price rises, so investors still need to be patient.”
ZHIWEI ZHANG, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT, HONG KONG
“The batch of macro data shows mixed messages. While the GDP growth surprised on the upside in Q4, the unemployment rate rose above 5%. I think the shift of policy stance last September helped the economy stabilise in Q4, but it requires large and persistent policy stimulus to boost economic momentum and sustain the recovery. To curb the rise in unemployment rate, fiscal policy must take a more proactive stance.”
ZHAOPENG XING, SENIOR CHINA STRATEGIST, ANZ, SHANGHAI
“GDP surprises the market at 5.4% y/y high on a low base as well as policy stimulus. IP is strong due to external frontloading demand, while retail sales normalise to annual average levels.
“The strong numbers pave the way to about 5% 2025 growth target and offer a chance for China to review the risk side in the economy. Recent liquidity tightness and Vanke saga both suggest macro prudential now carry more weight than growth in the policy agenda ahead of U.S. tariffs. We expect the PBoC to ease immediately against the possible tariff shock. Near-term RRR cut before LNY remains possible, but rate cut may delay.”
WOEI CHEN HO, UOB, ECONOMIST, SINGAPORE
“It’s mainly driven by the industrial sector in December. Part of this would be to do with front-loading of production and exports before (U.S. President-elect Donald) Trump comes back to office.
“That may not be sustained going forward, so the outlook for this year is still going to be weak. Retail sales is one of the most important things we should be watching now because it is a reflection of the consumer sentiment, which I think is still rather soft at this point.”
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
“That’s a sigh of relief for Chinese assets, it signals that the stimulus measures of 2024 are having an impact. China markets still face structural headwinds as well as tariffs risks, and the response to those will be the ultimate driver of long-term returns. The beat is quite strong on industrial production – perhaps that’s because of the export front-loading to the U.S. before the new administration’s tariffs kick in. Property still weak, retail sales comes more from the stimulus impact.
“Positive signals, but we will need to see how stimulus and tariff risks develop from here for the momentum to sustain.”
BACKGROUND
* China’s economy has struggled for traction since a post-pandemic rebound quickly fizzled out, with a protracted property crisis, weak demand and high local government debt levels weighing heavily on activity.
* Policymakers have unveiled a blitz of stimulus measures since last September to revive sputtering growth, and have pledged to do more this year as U.S. President-elect Donald Trump, who has proposed hefty tariffs on Chinese goods, is set to return to the White House next week.
* Analysts say the scope and size of China’s moves may depend on how quickly and aggressively Trump implements tariffs or other punitive measures.
* China is expected to unveil growth targets and stimulus plans during the annual parliament meeting in March.
* The world’s second-largest economy is likely to slow to 4.5% in 2025 and cool further to 4.2% in 2026 amid U.S. tariff pressures, a Reuters poll showed.
