GDP growth in China slowed to 4.6% in Q3 2024, yet the annual forecast is revised up to 4.8% amidst cautious optimism and mixed stimulus measures.
Economic Growth Update
In Q3 2024, GDP growth in China eased to 4.6%, slightly down from 4.7% in Q2, largely due to struggles in the manufacturing sector. Despite this slowdown, the 2024 growth forecast is revised upward to 4.8% from 4.7%, reflecting resilience in economic data and expectations of a steady Q4. While monetary easing by Beijing is evident, fiscal stimulus measures are still uncertain, leading to a cautious upward revision of the 2025 forecast from 4.4% to 4.5%.
Policy and Market Outlook
The recent growth revision in China suggests cautious optimism amid mixed stimulus initiatives addressing economic hurdles. The government seeks to balance growth and stability through infrastructure projects and support for SMEs to revitalize consumption and investment. Economists, however, urge continued reforms due to uneven recovery, with concerns over property market risks and trade tensions persisting. This delicate balancing act highlights the complexities China faces in sustaining growth while addressing both domestic and global economic challenges.
Mainland China’s economic landscape in 2023 is characterized by modest growth as policymakers grapple with mixed signals from recent stimulus efforts. The world’s second-largest economy has launched a series of measures designed to bolster consumption, investment, and overall growth, aiming to steer the nation toward a more robust recovery. Despite these efforts, the anticipated economic rebound remains sluggish, creating a complex environment for decision-makers.
China’s government has implemented a variety of fiscal and monetary policies, including tax cuts, infrastructure spending boosts, and interest rate adjustments to stimulate growth. Additionally, the People’s Bank of China lowered the reserve requirement ratio to increase liquidity and encourage lending. However, these moves have yet to translate into the significant economic acceleration policymakers had hoped for.
One major obstacle continues to be the uneven recovery from the pandemic, with sectors such as real estate and manufacturing showing signs of strain. The property market remains volatile, as developers face both financial challenges and regulatory pressures. Manufacturing, while bouncing back from initial COVID-19 disruptions, is now experiencing demand uncertainties from global economic headwinds and geopolitical tensions, which affect export-driven industries.
Consumer confidence is another critical factor that has kept economic momentum in check. Although retail sales have seen some improvement, they remain below pre-pandemic levels, reflecting cautious consumer sentiment and a propensity to save in the face of uncertain economic prospects. Efforts to boost consumption, such as subsidies and vouchers, have yet to yield substantial increases in household spending.
Moreover, external factors, including trade tensions and a sluggish global economic environment, create additional pressures. These international challenges complicate the domestic recovery scenario by dampening export growth, thus influencing overall economic performance.
In this context, China’s policymakers are likely to continue adjusting their strategies, seeking a balance between short-term stimulus and long-term structural reforms to foster sustainable growth. As they navigate these challenges, the world closely watches China’s next moves, given its significant role in the global economy.
Source : Mainland China: Modest Growth Adjustment Amid Mixed Signals from Stimulus Efforts
