China Economy & Business International Markets Macroeconomics United States and Canada
Sinographs January 16, 2025

China’s economic performance: New numbers, same overstatement

By Daniel H. Rosen and Jeremy Smith

On January 17, China’s National Bureau of Statistics (NBS) is scheduled to issue preliminary gross domestic product (GDP) data for 2024. Spoiler alert: Based on all indications, authorities will report economic growth within one- or two-tenths of 5 percent, exactly as planned more than twelve months ago. That result will be political, underscoring Beijing’s assertion that it has the means to steer the economy to whatever result is desired. But is that the growth rate that objective economists would arrive at? 

We calculate that China’s property and local government-driven slowdown was far more severe in 2024 than reflected in official data, as has been the case in previous years as well. Official data is not consistent with China’s growth and its impact on the global economy. Macroeconomic data shows good news of growth consistently hitting targets: if that were the case, Beijing’s increasingly aggressive policy actions aimed at propping up the economy would not be necessary. 

Rhodium Group estimates that China’s GDP grew between 2.4 percent and 2.8 percent in 2024, well below NBS figures. Looking ahead, after three years of drag from the property crisis, China’s economy should see some cyclical improvement in 2025. This is partly because property has fallen far enough. Just as importantly, Beijing is finally acknowledging the urgent need to stimulate domestic consumption. Policy actions pledged so far are likely to boost growth to the 3 to 4 percent range in 2025, perhaps even as high as 4.5 percent—but only if everything goes Beijing’s way.

While Beijing’s claim that it made its targets in 2024 is simple, the real performance is more complex. Here is a cheat sheet for looking at the actual 2024 economic performance, and the outlook for 2025, using an expenditure-side GDP framework. 

2024 in review

Investment growth was probably flat at best. It most likely declined again in 2024, driven by the slowdown in local government investment, particularly in infrastructure. The property sector continued to decline, with new starts down by 23 percent through November and completions down by 26 percent. Private sector fixed asset investment fell even in official data.

Household consumption likely contributed somewhere between 1.3 and 1.6 percentage points to 2024 growth. According to NBS household survey data, real per capita household expenditure expanded by over 5 percent. But this is hard to square with other indicators, which show retail sales growth at half the 2023 rate, consumer confidence at rock bottom, consumer price inflation near zero, and declining e-commerce sales.

Government consumption growth was probably weakly positive. Monthly government expenditure data show meager overall spending growth of around 1 percent, dragged down by local government fund expenditure, which contracted for the fourth consecutive year. The stimulus package announced in November focuses on refinancing local government debt at lower interest rates, which is necessary from a debt sustainability perspective but will have a limited impact on government consumption.

Lastly, net exports are on track for their third-largest contribution to China’s growth this century. Exports rose 6.7 percent in value terms year-to-date through November, and falling export prices—partly a symptom of China’s industrial overcapacity—mean that real exports have been even stronger. Imports have been weak due to subdued domestic demand.

The outlook for 2025

Investment is likely to return to positive growth in 2025. Construction activity will stabilize, with new housing starts now below Rhodium estimates of long-term equilibrium demand. Local government infrastructure investment should improve as well, given more aggressive fiscal deficit spending. Private investment will likely remain weak, however, given the overall constraints on credit growth and continued deflationary pressures in producer prices.

Boosting household consumption was the top message at the December 2024 Central Economic Work Conference. However, policy support is mostly focused on expanding trade-in subsidy programs for consumer durables, which have had an unclear impact on aggregate consumption. Meanwhile, the profound negative wealth effects from the real estate crisis and fragile labor market conditions continue to depress consumer confidence.

Government consumption should contribute more to growth in 2025. The government has promised a stronger fiscal impulse, reportedly including an expanded fiscal deficit target and larger special treasury bond issuance. Still, China’s fiscal system will remain constrained by weak revenue growth. 

China’s net exports outlook is deeply uncertain, pending the scope and timing of potential US tariffs. China’s possible responses include a combination of its own tariffs, currency depreciation, and targeted export restrictions. If global markets remain open to China, growth in China’s record-high trade surplus is likely to be small but positive.

Overall, the picture for 2025 is one of near-term improvement, but this should not be mistaken for a long-term recovery. Overinvestment in manufacturing remains a serious challenge—one that will make China’s trading relationships more fraught in 2025. Rebalancing toward a consumption-led economy will require much deeper economic liberalization.   


Daniel H. Rosen is a nonresident senior fellow with the Atlantic Council’s GeoEconomics Center and a founding partner of Rhodium Group where he leads the firm’s work on China, India and Asia.

Jeremy Smith is a Research Analyst with Rhodium Group’s China practice, focusing on China’s evolving growth dynamics and economic engagement with the world.

Data visualizations created by Jessie Yin

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