The publication of the first estimate of Chinese growth in 2024 reassured the authorities but did not convince Western observers. The figure is first and foremost symbolic since it corresponds to the objective set by the country's authorities. And there was some doubt about whether it would be 4.9 or 5%. Given the margins of error inherent in any statistic, the difference is not significant. But to reach this figure, a clear acceleration in growth was needed in the 4th quarter.
It intervened: in the 3rd quarter, GDP had grown by only 4.6% over one year. Growth in the 4th quarter closed the gap with the objectives as it reached 5.4%. The rebound was clear at the end of the year as industrial production grew by 6.2% in December after 5.4% in November. But investment (+3.3% in 2024) and household retail sales (+3.7% in December after +3% in November) still reflect the weakness of domestic demand despite the stimulus measures decided in 2024: monetary easing to support real estate and help for families to buy cars or household equipment.
The evolution of demographics is worrying. The one-child policy decided to curb population growth and improve living standards is beginning to produce its negative effects: the population has fallen by 4.3 million people in the last three years, but at the same time life expectancy has increased, resulting in an ageing that is reminiscent of the situation in Japan and which is unfavourable to growth. Measures to boost the birth rate, in particular the lifting of the ban on having a third child in 2021, have been adopted. After seven years of decline, the number of births has risen again to 9 million in 2023 and 9.5 million in 2024. But it remains lower than the number of deaths (11 million in 2024) and above all, with the number of women of childbearing age expected to fall, the current rebound is likely to be short-lived.
The growth achieved in 2024 in a context where domestic demand was insufficient for structural reasons, was therefore essentially the result of foreign trade performance. Exports rose sharply to nearly $3.5 trillion while imports fell to around $2.5 trillion, a surplus of $964 billion, which alarmed officials in Western countries, first and foremost the United States. The criticism levelled at China is that it is saving its economy, which has been hit by the real estate crisis and falling household confidence, by exporting massively thanks to subsidies granted to its companies.
The caution, if not hesitation, shown by the Chinese authorities to finally adopt a policy of stimulating domestic demand, is probably linked to the international context. The arrival of Donald Trump in the White House is a major factor of uncertainty for trade relations. Beijing probably waited to know what the new president's decisions would be before launching the real stimulus program that countries that consider themselves victims of Chinese exports are waiting for. This program could even be one of the elements of the negotiations that will inevitably open between Beijing and Washington and with the European Union.
The US president's first statements contrast with the aggressive messages sent during his campaign to his neighboring countries, Canada and Mexico, and to China. This apparent moderation may foreshadow the opening of negotiations to redefine the rules governing trade relations with Beijing. The presence of Vice President Han Zheng at Donald Trump's official inauguration ceremonies is a significant indication of the willingness of the Chinese and American leaders to open a dialogue. The announcement in Davos by the American president to reduce the levels of customs duties he intends to enforce to 10% is an encouraging signal. In this context, China could bring to the negotiating table a major stimulus package that would give each side the opportunity to agree on new rules on their trade and avoid aggressive unilateral measures.
Chinese industry is continuing its transformation in two strategic sectors, automotive and energy. Electric or hybrid vehicles have seen a spectacular rise in recent years. Registrations reached 11.25 million units in 2024, up more than 50% year-on-year and already represent 8.9% of all passenger cars, or more than 30 million units. More than half of the world's car fleet already uses these new engines. Total vehicle production reached a new record in 2024 with 31.3 million units and this confirmed China's position as the world's largest market. A further increase of around 5% is expected in 2025
The success of electric and hybrid vehicles has been made possible thanks to the installation of 33,100 charging points on motorways. 97% of their service stations are now equipped. Thanks to these considerable volumes, Chinese manufacturers therefore benefit from a lead over European manufacturers, which will be subject to a double penalty: their presence on the Chinese market is expected to be greatly reduced and they will be confronted with fierce competition on their own market.
The development of renewable energies is another major factor in China's growth. Following the massive investments made over the past ten years, the end of 2024 was marked by a very sharp increase in the production of carbon-free electricity. Over one year, hydropower production was up by 5%, nuclear by 11.4%, wind turbines by 6.6% and solar by 28%, which allowed the production of thermal power plants to fall by 2.6%.
These two engines of Chinese growth, the electrification of the car fleet and the reduction in the use of fossil fuels for electricity production, also contribute to the reduction of greenhouse gas emissions. They give real credibility to the carbon neutrality objective that the country has set for 2060, which is essential if we want to limit the rise in temperatures and which would prove that we can reconcile economic growth and the fight against global warming.
Donald Trump's arrival in power is therefore not an obstacle to the pursuit of Chinese growth because his actions are not in contradiction with Beijing's strategic choices. "Dig, Baby, Dig" will lead to an increase in oil production and especially natural gas, and therefore to a stabilization of world prices. However, China will increasingly need natural gas to replace coal with coal, which pollutes much more. Thanks to LNG from the United States, global supply will grow and the country will be able to meet its targets.
The same will be true for the automotive industry. It is difficult to think that an agreement would be impossible when we know that Donald Trump has chosen as his closest collaborator the founder of the world's largest producer of electric vehicles who has invested massively in China. But in this case, it is clear who would be the victim of this rapprochement: European industry.
All in all, the transition from the Year of the Dragon to the Year of the Snake will not necessarily be unfavorable for the Middle Kingdom.