China's economy achieves 5% growth in 2024 amidst dual circulation

Editor's note: Liu Chunsheng, a special commentator on current affairs for CGTN, is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinion and not necessarily the views of CGTN.

In 2024, China's economy demonstrated resilience and potential under the dual circulation pattern of domestic and international economic flows, with a 5 percent annual growth rate, achieving the target set at the beginning of the year. Overall, China's economy remained stable and progressed steadily, with substantial progress toward high-quality development.

On the domestic demand side, despite facing certain challenges, China made significant efforts through a series of policy measures to stimulate the recovery of the domestic market. In 2024, it implemented several policies aimed at boosting consumption, including increasing the income of low- and middle-income groups, enhancing consumption capacity and expanding service consumption. These measures helped support the recovery of the domestic market, particularly in the fourth quarter when a combination of incentives contributed to a mild rebound in domestic demand.

On the external demand side, China's export market maintained strong resilience. The country's exports grew by 7.1 percent year-on-year, mainly due to China's position and advantages in the global industrial chain. Foreign trade continued to make an outstanding contribution to the development of the Chinese economy.

However, in 2025, the export market is expected to face greater challenges. Global economic growth is projected to remain slow, which could lead to reduced demand for Chinese goods. Additionally, the tariff measures imposed by the EU and the U.S. on China's semiconductors, electric vehicles and solar panels could take full effect in 2025, potentially having a significant negative impact on China's exports. Moreover, the upcoming new U.S. administration may introduce broader and more aggressive tariff measures, further increasing pressure on China’s exports.

In terms of industrial upgrading and the transition between old and new drivers of growth, China's economy made some progress in 2024. Although traditional industries such as real estate, steel and textiles showed signs of stagnation, emerging sectors such as semiconductors, smartphones, shipbuilding, drones, electric vehicles and new energy industries maintained strong growth momentum. This indicates that China has made progress in industrial restructuring and transformation.

The transition from old to new drivers of growth is not flawless. Traditional industries still account for a large share of the economy, and emerging industries are not yet capable of fully replacing traditional sectors. Furthermore, some emerging industries face challenges such as technological bottlenecks and low market recognition.

In 2025, the primary task for China's economic work will be to significantly boost consumption, improve investment efficiency and comprehensively expand domestic demand. The central government has emphasized the need to implement targeted consumption-boosting actions, raise incomes and reduce burdens for low- and middle-income groups, among others. It will continue to implement policies to expand the scope of new energy and new consumption initiatives, innovate in diverse consumption scenarios and expand service consumption, particularly in the cultural and tourism sectors.

These policies will contribute to the development of the domestic market and consumption upgrading. As household income levels rise and consumption patterns evolve, the domestic market will become an increasingly important pillar of China's economy. In addition, improving investment efficiency and optimizing investment structures will further stimulate economic growth.

China's economy will keep relying on technological innovation to lead the development of new productive forces and build a modern industrial system. The 2024 Central Economic Work Conference stressed the need to strengthen fundamental research, tackle key core technologies and strategically plan major technological projects.

By strengthening technological innovation, which is a crucial driver of economic development, and industrial upgrading, China can move toward a higher-quality development stage. This will also enhance its position and competitiveness in the global industrial chain.

In 2025, China needs to effectively prevent and resolve risks in key sectors and firmly safeguard against systemic financial risks. For example, the real estate market is a critical component of China's economy and a key area for risk prevention. By promoting the stable and healthy development of the real estate market, China can mitigate related risks and ensure stable economic growth.

China will continue to expand high-level opening-up and stabilize foreign trade and foreign investment. The government highlighted the need to expand autonomous and unilateral opening-up in an orderly manner, gradually broaden institutional openness and improve the free trade zones' efficiency and extend reform mandates.

Recently, a surge of American netizens flocked to Chinese social media app Xiaohongshu (RedNote), indicating that openness and exchange resonate more with the public than isolation and confrontation. Openness to the outside world is one of the defining features of China's economy.

By expanding high-level opening-up, China can attract more foreign capital and investment, promote the internationalization and globalization of the Chinese economy and enhance its influence in global economic governance.

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