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China's Economic Growth Surges: Stimulus Measures Prove Effective

News Summary: China has achieved its official growth target for 2024 as stimulus measures implemented late last year successfully boosted industrial production, spending, and exports.

　　Lead: In a robust resurgence of its economy, China's gross domestic product (GDP) expanded by 5.4 percent year-on-year in the fourth quarter of 2024, surpassing expectations and indicating success from the government's series of stimulus measures aimed at reviving growth in key sectors.

　　Main Body:

　　China's National Bureau of Statistics (NBS) reported that the GDP growth rate of 5.4% in Q4 2024 exceeded projections of 5% and marked an improvement from the 4.6% growth recorded in the previous quarter. This growth is attributed to a targeted economic stimulus program that included increased public investment and support for consumer spending.

　　The stimulus measures, introduced late last year, were aimed at counteracting the economic slowdown that followed the global financial disruptions and domestic challenges such as high youth unemployment and sagging consumer confidence. These efforts were crucial as the economy faced pressure from external factors, including potential tariff hikes from the U.S. administration under President Donald Trump.

　　Analysts note that the export sector exhibited particularly strong performance, with China's exports witnessing a remarkable 10.7% year-on-year growth in December. The trade surplus also hit a record high, providing additional confidence to the economy. The boost ahead of potential U.S. tariffs helped alleviate fears among investors and contributed to a more optimistic outlook for the Chinese economy.

　　Consumer price inflation remained subdued, growing only by 0.1% year-on-year in December, reflecting persistently low demand in some sectors despite government efforts to spur consumption. However, the People's Bank of China (PBoC) has maintained its stance of cautious easing, opting to retain key interest rates unchanged for stability.

　　The services sector showed the fastest growth rate in December, as indicated by the Services Purchasing Managers' Index (PMI), which rose to 52.2, up from 51.5 in November. This increase was fueled by a growing influx of business and improved consumer sentiment. In contrast, the manufacturing sector experienced slower growth, with the Caixin Manufacturing PMI dipping to 50.5 from 51.5.

　　The expansion enjoyed by the private sector is also noteworthy, with fiscal stimulus and loose monetary policies providing necessary support. December data pointed to a slight slowdown in manufacturing growth, primarily due to decreased foreign demand. Still, businesses are navigating the delicate balance between sustaining growth and averting inflation.

　　The current landscape for China's economy reflects lingering challenges, including rising debt levels primarily driven by provincial governments' expansionary policies to finance infrastructure projects. The PBoC and the central government are under pressure to maintain productive dialogue about fiscal plans and adjust policies to promote long-term economic sustainability.

　　Conclusion:

　　China's recent economic data presents a mixed, yet hopeful outlook as growth measures bear fruit. As the government continues to stimulate the economy through prudent monetary policies and infrastructure spending, attention will remain focused on sustaining consumer confidence. Moving forward, analysts are keen to see how China adjusts its policies in light of potential global economic shifts, especially as the nation seeks to maintain its ambitious growth targets while managing the complexities of both domestic and international pressures.

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