Beijing: China posted one of its weakest economic growth rates in decades last year, registering a 5 percent increase in GDP, down from 5.2 percent in 2023, according to data released by the National Bureau of Statistics (NBS) on Friday. The figures reflect ongoing challenges, including a prolonged property market debt crisis, sluggish domestic spending, and heightened external pressures, as global trade uncertainties loom.

Despite aggressive measures by Beijing, including interest rate cuts, expanded subsidies, and eased local government debt, the country has struggled to regain pre-pandemic momentum. Consumer sentiment remains subdued, with retail sales growing by just 3.5 percent in 2024, compared to 7.2 percent the previous year. Industrial output, however, provided some relief, rising by 5.8 percent, up from 4.6 percent in 2023.

The NBS acknowledged the "complicated and severe environment with increasing external pressures and internal difficulties," cautioning that the economy continues to face "difficulties and challenges."

Export Highs and Trade Concerns
In a rare positive development, China's exports reached a historic high in 2024. However, analysts warn that growing global uncertainties, including potential trade restrictions under incoming U.S. President Donald Trump, could undermine China's massive trade surplus.

Trump, who begins his second term next week, has pledged to impose heavy sanctions on China, further exacerbating tensions.

Struggles in Domestic Consumption and Policy Responses
While Beijing has implemented measures to boost consumer spending, including expanded subsidies for household goods like rice cookers and microwave ovens, domestic consumption remains lackluster. Analysts attribute this to a broader "crisis of confidence" among households and businesses.

"Monetary policy support alone is unlikely to right the economy," said Harry Murphy Cruise of Moody's Analytics. "China is suffering from a crisis of confidence, not one of credit; families and firms do not have the confidence in the economy to warrant borrowing, regardless of how cheap it is to do so."

To combat these challenges, China's central bank has signaled further rate cuts in 2025 as part of its "moderately loose" monetary policy stance.

Deflation Risks
China narrowly avoided deflation in December, with prices rising at their slowest pace in nine months. Earlier in the year, the country emerged from a four-month deflationary period, including its sharpest price drop in 14 years in February.

Economists warn that deflation poses significant risks, as consumers may delay purchases in anticipation of further price declines, slowing economic activity further.

Looking Ahead
Analysts predict China's economic growth could slow to 4.4 percent in 2025, with the possibility of falling below 4 percent in subsequent years. While Beijing has introduced incremental policy measures to stabilize the economy, experts argue that bolder fiscal actions are needed to restore consumer confidence and ensure sustainable growth.