China's Economy Surges Past Expectations in Q4, But Challenges Loom Ahead

China's economy outperformed forecasts by growing 5.4% in Q4 2024, surpassing the annual target. This growth resulted from solid industrial output and retail sales, stimulated by government measures. However, challenges persist with U.S. tariff concerns and a struggling property market affecting future growth.

China's economy grew an impressive 5.4% in the fourth quarter of 2024, beating analysts' predictions and enabling the government to meet its annual growth target, according to official data released on Friday. This growth rate is significantly higher than the 5.0% anticipated by experts and compares with a 4.6% increase in the previous quarter.

Industrial output rose by 6.2% in December, exceeding forecasts, while retail sales climbed 3.7%, both bolstered by the government's stimulus initiatives. However, challenges remain, particularly in the property sector, which saw a continued decline with a 10.6% decrease in investment. Concerns over potential U.S. trade tariffs also cloud the outlook for 2025.

Charu Chanana, Chief Investment Strategist at Saxo, Singapore, mentioned that these figures provide relief for Chinese assets and indicate the positive impact of 2024's stimulus measures. However, structural headwinds and tariff risks could impact long-term returns. China's policymakers are expected to announce new growth targets and stimulus plans at the annual parliament meeting in March.

(With inputs from agencies.)