Strong economic momentum drives China's path forward in 2025

Editor's note: Matteo Giovannini, a special commentator on current affairs for CGTN, is a finance professional at the Industrial and Commercial Bank of China, a Non-Resident Associate Fellow at the Center for China and Globalization (CCG) and a member of the Global Young Leaders Dialogue. The article reflects the author's views and not necessarily those of CGTN.

China's economic performance in 2024 stands as a testament to the resilience, adaptability and determination of the world's second-largest economy. Despite facing complex global headwinds, including geopolitical tensions, weak global demand and domestic challenges, China managed to achieve a GDP growth rate of 5 percent. This performance not only met the government's annual target but also exceeded market expectations, solidifying confidence in the country's long-term economic trajectory.

A particularly notable achievement was the vigorous economic expansion in the fourth quarter of 2024. Data showed a 5.4 percent year-on-year growth during this period, the fastest pace since mid-2023. This strong finish was underpinned by targeted fiscal and monetary policies designed to stimulate domestic consumption, support industrial production and stabilize key sectors.

For example, December's industrial production rose by a remarkable 6.2 percent, driven by a revival in manufacturing activity and infrastructure development. Retail sales, a vital indicator of consumer confidence, climbed 3.5 percent for the year, reflecting a gradual recovery in household spending. These figures underscore the government's effective policy calibration, which balances short-term needs with long-term structural goals.

The export sector also played a pivotal role in China's economic success in 2024. Anticipating possible policy shifts in the United States, Chinese exporters front-loaded shipments, ensuring robust trade performance despite global uncertainties. The manufacturing sector, a cornerstone of China's economic stability, grew by 5.8 percent, reflecting the resilience of supply chains and the adaptability of Chinese firms to shifting global dynamics. These achievements highlight China's ability to maintain its position as a vital engine of global trade and growth.

Looking ahead to 2025, China's economic agenda is poised to focus on several critical areas. First and foremost, stabilizing the property market will be a top priority. The sector's outsized influence on overall economic health and financial stability necessitates decisive action. Policymakers are expected to roll out measures aimed at boosting market confidence, including easing financing conditions for developers, providing incentives for homebuyers and addressing systemic risks tied to local government debt. These steps will be crucial in restoring balance to the housing market and ensuring its sustainable contribution to economic growth.

Domestic consumption will also take center stage this year. While retail sales showed signs of recovery in 2024, the uneven pace of growth underscores the need for targeted measures to boost consumer confidence. The government is likely to introduce policies such as tax cuts, subsidies and other fiscal incentives to encourage spending.

At the same time, improving social safety nets, including healthcare, education and pension reforms, will be essential in reducing precautionary savings and unlocking the full potential of China's vast consumer market.

Externally, the specter of renewed trade tensions, particularly with the United States, remains a critical risk factor. To mitigate these challenges, China is expected to deepen its economic ties with emerging markets, especially in the Global South, and strengthen partnerships with key economies such as the European Union. Diversifying trade relationships and reducing dependency on traditional markets will be vital in safeguarding the stability of China's export sector.

Concurrently, the push for technological self-reliance will continue to be a cornerstone of national policy. Investments in semiconductors, artificial intelligence, renewable energy and other cutting-edge industries will position China as a global leader in innovation and reduce vulnerabilities to external shocks.

Another area of focus will be structural reforms aimed at addressing inefficiencies and fostering long-term sustainability. Economists have long emphasized the importance of transitioning from short-term stimulus to policies that promote productivity and innovation.

Deregulating key industries, encouraging private sector participation and attracting foreign investment in high-tech and green energy sectors will be instrumental in driving this transformation. Restoring confidence among private enterprises will also be critical, as these firms are key engines of job creation, technological advancement and economic dynamism.

Fiscal and monetary policies will play a pivotal role in shaping China's economic trajectory for the rest of the year. With plans already in place to increase the fiscal deficit and issue more government debt, the authorities have signaled their commitment to proactive measures. These funds will likely be channeled into infrastructure projects, social welfare programs and initiatives aimed at promoting regional development. On the monetary side, maintaining ample liquidity within the financial system will be crucial to supporting businesses and ensuring stable credit flows.

China's global role will also be a key consideration in 2025. As the country navigates an increasingly complex international environment, it has an opportunity to enhance its global leadership by addressing shared challenges such as climate change, public health and supply chain resilience.

Through an unwavering commitment to openness in economic policymaking, China will strengthen international trust and foster deeper collaboration, reinforcing the country's commitment to building a community with a shared future for humanity.

In conclusion, China's economic achievements in 2024 demonstrate resilience, strategic policymaking and capacity to adapt to a rapidly changing global landscape. The strong GDP growth, development in industrial output and stabilization of consumer spending provide a solid foundation for future progress. As China embarks on its 2025 journey, its focus on fostering innovation, promoting sustainable development and strengthening global partnerships will be critical in ensuring long-term prosperity and reinforcing its position as a pioneer in the global economy.

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