China’s economic recovery: Real growth or illusion?

Data Snapshot China’s economic indicators from November 2023 to November 2024 demonstrated a cautiously optimistic trajectory. Retail sales showed steady growth, rising from a low of 3% in December 2023 to 4.5% by November 2024. Industrial output remained stable, fluctuating between 5.3% and 5.7%, underscoring the manufacturing sector’s resilience. New house prices exhibited a slight month-on-month recovery, increasing from -0.5% to 0.2%, while urban unemployment gradually fell to 5.0%, its lowest point over the period. This data paints a picture of gradual recovery amid persistent structural challenges. Analysis The improvement in retail sales signals a recovery in consumer spending, although it remains uneven. Declines at the end of 2023 reflect lingering post-pandemic caution and global economic uncertainty. However, by mid-2024, retail sales began to stabilize, indicating the gradual return of consumer confidence, buoyed by government measures aimed at boosting domestic demand and mitigating economic headwinds. For 2025, further policy-driven incentives, including tax rebates and direct consumption subsidies, could provide additional momentum. Nevertheless, risks such as household debt and slow wage growth may temper this progress, particularly in China’s vast rural and lower-income urban markets. The industrial output data highlights manufacturing’s role as the bedrock of China’s economy. Despite marginal fluctuations, growth remained above 5%, driven by investment in high-tech industries and energy sectors. Government initiatives to strengthen supply chains, coupled with increased infrastructure spending, supported this resilience. However, external challenges, including sluggish global trade and rising geopolitical tensions, could restrain export-driven growth. For 2025, sustained innovation in sectors such as renewable energy and artificial intelligence will be critical to maintaining industrial momentum and offsetting declines in traditional manufacturing. The real estate sector, a critical driver of economic stability, shows only tentative recovery. New house prices gradually moved into positive territory, indicating modest improvements in demand. This aligns with government support measures, such as relaxed lending policies and financial aid to developers. Still, structural weaknesses remain, including high inventory levels and buyer uncertainty in smaller cities. The drop in unemployment, reaching 5% by November 2024, signals incremental improvements in urban labor markets, which could support housing demand in 2025. Ongoing regulatory focus on affordable housing and sustainable urban development will be crucial for stabilizing this sector, ensuring it does not derail the broader economic recovery. The Jing Daily Data Snapshot presents a swift take and analysis on the latest data from the leading research firms in the Chinese luxury and lifestyle markets.

China’s economic recovery: Real growth or illusion?

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Published December 21, 2024

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China’s economic recovery: Real growth or illusion?